Rebels without a clue
July 28, 2011
All the talk about the U.S. government hitting the brick wall of bankruptcy next week misses many of the finer points of fiscal mechanics.
The precise statement of the problem comes in three parts.
First, if forecasts of volatile Treasury deposits and withdrawals come in on track, the Treasury's account at the Federal Reserve would go into overdraft around August 2. This is an uncertain projection because the United States is spread over half a continent and has many global entanglements. Figuring out the balance in the government's checking account each day, let alone a week in advance, involves guess work.
