NO LONGER OWED TO OURSELVES

Debt financing apologists have a line to the effect that "we owe it to ourselves" regarding the national debt. Figure 1, from Strategic Investment, p 1, February 19, 1997 available from 12 17 St. Paul St., Baltimore, MD 21202, shows that this has changed markedly during the Clinton Administration. Now, fully 90% of United States annual federal deficits are being financed by foreign central banks. How long are people outside of the United States going to continue to finance our deficits?

US Treasuries held by foreign central banks (12-month change) divided by federal deficit (12-month sum).

Even at a very conservative estimate of $200 billion per year, the termination of this borrowing binge is going to cost approximately (200,000,000,000) / (4,000,000) = 50,000 lifetimes per year or about twice the annual loss to fatalities on our nation's highways. The deaths will, of come, be among our economically marginal people - the forgotten victims of socialist misallocations of resources.

A related report, "Sometimes, Stocks Go Nowhere for Years" by David Wessel in fie Wall Street Journal, p 1, January 13, 1997, gives a graph of stock market earnings-to-price ratio vs. percentage gain in stock prices during the subsequent 10 years compiled from 1881 to 1987. The current ratio is at the lowest level of the century and corresponds to a zero percent gain in stock prices for the next ten years.