Sunday Pundits (again)

ABC had Paul Krugman calling for yet another stimulus bill. Last one wasn't big enough. Krugman is a NY Times op ed writer and a Nobel prize winning economist. Listening to him this morning makes you wonder why this turkey won the Nobel. He starts out explaining than another $500 billion or so makes no difference in the budget deficit. Then he claims that there is a difference between "long term" deficit and "short term" deficit. I don't see that, deficit is deficit.
What Krugman doesn't understand is the US economy is the biggest in the world, by a lot. We have a debt approaching 100% of US gross national product (GNP). That's more money than there is in all the world. We are too big, and need too much money to be able to borrow it all. Little dinky place like Greece can borrow 100% of its GNP, and because their GNP is tiny, the money is there. The US GNP is too huge to finance. The Obama budget runs trillions and trillions of dollars in debt, for ever. Today we can sell T-bills at 3.5% interest, mostly because the US government is considered the soundest investment on the planet. Tomorrow that won't work. Today the Chinese are raking in more money than their economy can handle, so they are parking it in a safe place, namely T-bills. Tomorrow their economy will be big enough to absorb all their earning and they will stop buying T-bills. Look for interest on T-bills to jump up from 3.5%.
In short, Nobel prize winning Krugman thinks he sees the light at the end of the tunnel. He doesn't realize that it is the headlight of an onrushing train.