RE:RE:The US Budget Deal - Some ThoughtsJay - Good points..
To your point, there was talk by Yellen that after the debt ceiling was raised, the Treasury Department would be floating a 1 TRILLION$ offering....a mind boggling amount. Just to put this number into perspective and to illustrate just how silly the world has become, the size of that offering alone is equal to half of Canad's annual GDP in US$!!! Another way to put this into perspective - of the 195 countries in the world, only 16 of them have a GDP greater than 1 Trillion US$. Any way you want to look at this, it is a scary number and it just one offering with more to come as the CBO has projected budgetary deficits of greater than 1 trillion the next 10 years.
To float an offering of that size, they will have to offer an attractive (read high) interest rate which will not only suck money out of the economy as you point out but also will cause economic hardship for those already in debt on their credit cards and for those up for renewal on their mortgages. In addition, not all of that money will be sourced in the United States and so it will suck money from the economies of other countries.
Perhaps in my old age I don't have any imagination left but it is hard for me to see a way that all this will end well.