and none coming before earliest late January. Bush says no and 73% of America says no. Even Reid admits there is no number to support an override even if he could get a bill.
The government gives away real dollars. They sell treasury securities to generate deficit money. These treasuries require interest. They also come from people who are already using the money in the economy for other purposes. Unless....
Unless they are being purchased by the fed to put money *out* in the economy. In that case, *which is the present case directly or indirectly,* this new money is power money.
A Trillion in *power* money is equal to 10 Trillion in currency expansion economy-wide (because of the bank reserve rule).
The entire economy is only about 13T annually. *This suggests inflation -to put it mildly.* All that prevents is the present fear of the banks. They are not lending for fear of insolvency.
As the economy heats again, as it must, domestic dollars will inflate(lose buying power) *and the fed will begin to sell its treasuries and retire dollars attempting to compensate.*
When this happens, the treasury rate will have to go up to attract buyers because these buyers will not want a treasury that does not compensate for inflation.
Mortgage rates will also, must, go up. Business borrowing rates (corporate interest on bonds)will go up. The effect of this is to slow the economy even as loose money is being gathered in by the fed.
In this situation, the fed is stuck. Loose money stirs the pot but is inflationary. Tight money breaks inflation but kills business.
But Bernanke knows the rule: When that happens, killing inflation comes first.
If Obama's bill kicks us into run away inflation, what will follow will be a far steeper recession as in early 80s or worse.
As of now, GDP was +1.2% for all of last year. It is no time for this sort of action. It is certainly not time for a president to sound panicky on a daily basis.
Far better to *talk up* the economy and reassure business -but I fear that deep down, business is the enemy to Obama as it remained for FDR.