[Congressional Record (Bound Edition), Volume 155 (2009), Part 3]
[House]
[Pages 3680-3682]
[From the U.S. Government Publishing Office, www.gpo.gov]




                         CHINA SEEKS GUARANTEE

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Indiana (Mr. Burton) is recognized for 5 minutes.
  Mr. BURTON of Indiana. Mr. Speaker, this chart shows the amount of 
money that we have in circulation in dollars. And, as you can see, that 
up until recently there wasn't a great deal of increase in the amount 
of money in circulation.
  But, just in the last few years, last couple of years, it has shot 
straight up. Straight up. That means that we are seeing an inflationary 
trend unparalleled in American history. But that is not the end of it. 
People need to know that their money is going to buy a lot less if we 
continue down the road we are on.

[[Page 3681]]

  Now just to let you know where some of the money is that is not on 
this chart, China has given us about $690 billion in loans. And, just 
this week, leaders in the Chinese government said that they were very 
concerned about the value of those loans being eroded by ``reckless 
policies'' in the United States of America. The U.S., ``should make the 
Chinese feel confident that the value of the assets at least will not 
be eroded in a significant way.''
  And Secretary Geithner of the Treasury has been told this. And yet he 
said just today that there could be as much as $2 trillion printed and 
put into circulation, at least a large part of it, because who's going 
to loan us money when the Chinese, who are the biggest holders of our 
debt, are saying that they want guarantees that the value of the 
currency is not going to go down. And so who's going to buy these 
loans? The Social Security trust fund has an awful lot of that money, 
and it's already bankrupt.
  But the fact of the matter is the Treasury Department of the United 
States, in my opinion, and I'm very sure this is going to happen, they 
are going to have to print more money. Billions and billions of dollars 
in additional money. And when they put that into circulation, the law 
of supply and demand is going to make it very clear that everything 
that we buy is going to cost a heck of a lot more.
  Now, if you have $100 and 100 quarts of milk, a quart of milk would 
cost $1. But if you triple the money supply and you have $300 and 100 
quarts of milk, it's going to cost $3 for a quart of milk. And that is 
the way inflation works.
  This is a very clear signal that our money supply is going up like a 
rocket right now. And Secretary Geithner is talking about $2 trillion 
more in addition to what they are talking about in the supplemental. 
The supplemental is over $800 billion, almost another trillion dollars. 
The omnibus spending bill which we are going to be passing is $410 
billion. And there's a $100 billion supplemental.
  Now think about that. Where is all that money going to come from? You 
can't give people something unless you take it away, as far as taxes 
are concerned. So we can't tax people that much. And so what they are 
going to have to do is they're going to have to inflate the money 
supply. And they are going to do it.
  The manipulation of our money supply is something that everybody in 
this country ought to be concerned about. They really should be 
concerned about it because the value of the money you have in the bank, 
and a lot of people have already lost a ton in the stock market, but 
the value of the money that you have in the bank and under the 
mattress, or wherever you keep your money, is going to be devalued 
dramatically because they are going to print so much more money. So 
there will be trillions of dollars more chasing the same amount or 
fewer goods and services.
  And everybody in America ought to be saying that we have got to put a 
hammer on the spending and put a hammer on these big policies that we 
are coming up with right now. I don't think people realize, honestly.
  I understand we have economic problems, but this is going to put our 
kids, our grandkids, and our posterity in one heck of a situation 
because they are either going to be taxed to the limit, or way above 
the limit, or they're going to have to deal with an inflationary spiral 
that means that the amount of money they have won't amount to anything.
  In Zimbabwe right now, one piece of currency is worth about 12 
million of their former currency. So they just put more zeroes on it. 
When people go to buy bread or food, they have to take buckets of 
money. That happened in post-World War II Germany. And we are going to 
do it here right in the United States if we don't get control of 
spending. This is real, folks. This isn't baloney.
  Geithner said today he may have to monetize up to $1 trillion, or get 
loans for $1 trillion or $2 trillion; $410 billion in the omnibus; 
$800-plus billion in the stimulus; $100 billion in the supplemental. I 
mean where is this money going to come from? Where is it going to come 
from?
  So, I'd just like to say, Mr. Speaker, to my colleagues and the 
American people, This ain't baloney. This is real dollars and cents. 
This is the future of our kids, our grandkids, and the future of our 
system of government in the United States of America. We must not let 
this happen. We must not let this happen.
  The National Debt currently stands at approximately $9.13 Trillion.
  $4 Trillion of this debt is owed to Social Security and other 
government accounts.
  $5.1 Trillion of this debt is held as ``Public Debt'' by banks, 
pension funds, mutual fund companies, ordinary citizens, State and 
local governments, and increasingly, foreign governments.
  As of November 2008--the latest figures available from the Treasury 
Department--$3.08 Trillion of our ``Public Debt'' is held by foreign 
countries:


                                Top Six

                        [In billions of dollars]

        Country                                          U.S. Debt Held
Mainland China....................................................681.9
Japan.............................................................577.1
United Kingdom....................................................360.0
Carib. Banking Centers............................................220.9
Oil Exporters.....................................................198.0
Brazil............................................................129.6
Carib. Banking Centers include Bahamas, Bermuda, Cayman Islands, 
Netherlands Antilles, Panama and the British Virgin Islands
Oil Exporters include Ecuador, Venezuela, Indonesia, Bahrain, Iran, 
Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, 
Algeria, Gabon, Libya, and Nigeria.
$1.517 Trillion of the ``Public Debt'' is outstanding as T-bonds and 
Notes.
$427.2 Billion is outstanding as Treasury Bills.
$1.944 Trillion appears to be loans held by Foreign Governments.
* We are unable to determine the interest rate on our National Debt but 
we do know that interest payment on the debt for FY 2008 (when our 
outstanding debt was smaller) was $430 Billion.

                              The Problem

  In addition to a $410 billion Omnibus, Congress is poised to enact an 
$800 billion Stimulus and a $100 billion Supplemental.
  Added to CBO's projected deficit of $1.2 trillion, Congress's 
legislation will force the Bureau of Public Debt to attempt a borrowing 
of $2.1 trillion this year.
  This is over four times the amount of new debt ever sold by the 
United States.


             How Does the Government Actually Borrow Money?

  The Federal Government currently owes about $10 trillion: $6 trillion 
to private lenders and $4 trillion to Government trust funds, mainly 
Social Security.
  Most of the debt owed to private lenders is short-term debt--owed for 
less than a year. Last year, the U.S. Government sold over $6 trillion 
in debt as it refinanced short-term debt and added to this number due 
to the deficit.
  When Congress approves the Stimulus and related spending bills, our 
action will force the Bureau of Debt to attempt to sell $2.1 trillion 
of our debt. Back in 2000, the U.S. auctioned debt 145 times. With 
borrowing exploding, our debt was sold 263 times last year and the 
number will rise dramatically after enactment of the Stimulus.
  Between the short-term current debt to be refinanced and the new debt 
sold, the Bureau of the Debt will attempt to borrow nearly $150 billion 
a week from world markets.
  While the number of primary purchasers used to top 40, only 17 
``primary dealers'' buy U.S. debt today.
  As recently as 2003, most purchasers of U.S. debt were American. Now 
the buyers are mainly foreign, with China topping the list of 
purchasers.


                       Who Will Buy Federal IOUs?

  We can already see warning signs of offering so much debt for sale.
  After buying over $1 trillion of U.S. debt (including over $300 
billion of Fannie Mae and Freddie Mac), China's desire for buying more 
American IOUs is waning.
  Fitch Ratings reported that China's purchases of U.S. debt will 
decline from over $400 billion last year to just $177 billion this 
year.
  China announced recently that it will decrease its buying of foreign 
securities worldwide as it borrows for its own $586 billion stimulus 
program.


   Other Governments Are Competing for Investors Still Willing to Buy

  The debt the U.S. will sell will compete with other governments 
wanting loans.
  The European Union, Japan, China, South Korea and 10 other 
governments announced

[[Page 3682]]

2009 borrowing plans of their own totaling another $1.2 trillion. One 
question we might ask--who has the money to purchase all of this U.S. 
and foreign government debt?
  Treasury officials express confidence that there are plenty of 
entities willing to lend the U.S. Government money. In these uncertain 
times, there is a ``flight to safety'' in U.S. treasuries. Last year, 
we borrowed $6.7 trillion against the $17 trillion offered. With such 
demand, why worry?
  Unfortunately, this year conditions are changing. With the U.S. 
offering four times the amount of new debt ever offered and Chinese 
willingness to loan us money disappearing, there may come a time when 
the interest we have to pay to sell our debt goes up. Most of our debt 
is held for less than one year.
  Any increase in the interest we have to pay to sell our debt will 
effect interest rates and constrain the Federal budget. Reuters 
recently reported that the ``Fed faces uphill battle to hold U.S. 
yields down.''
  The Wall Street Journal reported, that the Fed may enter the market 
as a direct purchaser of U.S. debt. If demand for U.S. debt was so 
strong, why would the Fed join the current list of 17 purchasers of 
U.S. debt to hold an auction? Are they worried that with so much debt 
to sell, they may be needed to save an auction?


               What Happens if We Cannot Sell More Debt?

  The worst case scenario would be an auction of Federal debt that 
failed to attract enough buyers.
  Recently, the German government failed at an auction of its 
government debts.
  Such an event in America would trigger another panic. Since U.S. debt 
auctions are reported openly within 90 seconds, a failed U.S. auction 
would trigger a panic on Wall Street long before Treasury officials 
could get the President on the phone.


                   How Much Will All This Debt Cost?

  Beyond the short-term concerns about quickly borrowing $2.1 trillion, 
we should be concerned about the long-term.
  There are only 111 million American individuals and families who 
actually pay taxes.
  Their pre-Stimulus debt per taxpayer totals $54,000 each.
  After adding $2.1 trillion to the $6 trillion currently owed, their 
debt rises in just one year to $75,000 each. Each family's debt will 
total more than a college education.
  Interest payments for the Government are rising too. In 1980, 
interest on our debt cost $52 billion. Last year, the payments were 
eight times more--$412 billion.
  To maintain faith in our dollar, these interest payments must be made 
before the first Social Security check or salary of a soldier can be 
covered.


                               Conclusion

  In these times, it is easy to see where Stimulus dollars will be 
spent. But before we approve such legislation, we should answer two 
other questions: (1) should we borrow this money and if so, (2) can we 
borrow so much money in just one year? Never in the history of our 
nation have we borrowed so much from so few.

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