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Tis very simple really... and not at all like WI likes to imagine as he waves his arms wildly gesturing about how terrible GW Bush and crew are. He like most Americans are real smart people who think they are clever and are on a cruise ship called Lollipop. Hey what da ya think about those Pats anyway?

As your credit worthiness declines the amount of interest you have to pay for a loan increases. However interest rates have been kept low and are now being pushed lower to keep the system liquid and to keep from falling into recession. Since markets tend toward equilibrium it is the value of the $$ that is reflecting the declining credit worthiness of the USA instead of interest rates.

You might say that all those people who hold $$$ and $$$ payable assets (Bonds) are paying for the war in Iraq, as the value of what they are holding is declining. This is not the first time that this has happened, a Democrat President by the name of LBJ first conjured up this ponzi scheme to finance the Vietnam war. Only then it was Gold being pegged to $35 an OZ that was the enabling vehicle.

It was also LBJ that first started dipping into SS funds to fund the Governments deficit spending. All the SS money was put into the General Fund and an IOU was put into the SS box. That has been the way the government has hidden the true amount of deficit spending for decades.

The reason interest rates were dropped to record lows (1% Fed Funds Rate) in late 2001 was 911, the system had to be kept liquid to keep from collapsing. The mantra being keep the cash flowing..remember 0% financing by GM. Then the inevitable greed set in and and voila the sub-prime mess.

To straighten out the mess one either has to raise taxes which will put a drag on business and growth. I always liked the idea of raising taxes during a recession, a proven path to make a recession into a depression. Or one has to cut spending, and somehow I just don't think Americans are prepared to see the level of services they receive pared by as much as they would have to be.

There is some very faulty thinking in the USA that was basically started during LBJ's tenure in the WH...that you can have "guns and butter"...to have a Great Society and fight a war at the same time without it effecting America's life style. In todays parlance it is to have "no child left behind" or "universal health care" The thinking being in Liberal circles that America is too rich a country to allow poverty to exist. The reality of the situation is that we live in a rough world and there are just not enough $$$ to build enough life boats for everybody on the good ship America.