The Debts of the Spenders: The High Cost of Living

The Treasury/Fed is in a race w/foreigners to see if they can print faster than the foreigners can buy govt bonds and swap notes. This is otherwise known as the inflation vs deflation battle. So far deflation is winning.

All those crazy programs Paulson and Bernanke invented to keep the banks on life support are costing a lot of money to say nothing of the daily breadline that forms outside the discount window every day.

Foreigners are only too happy to lend us the money as evidenced by the capital flows from Asia and the Middle East. Just watch the action in the govt bond and spot fx markets if you don't believe me. Take special note of the Treasury auctions that form up every so often.

Unfortunately for the dynamic duo, they don't realize the ultimate cost of their spending. Corporate earnings among exporters are going to get slammed in Q1 because of a stronger dollar.