“The US government has set itself up as the guarantor of all things bad, the lender of last resort, and the great insurer against all calamities. In the downward side of the business cycle, the government is bailing out homeowners, lenders, and speculators. Taxpayer are gifted with government ‘rebate’ checks. All this is done with borrowed money, while billions are also borrowed to wage war. The US government can spend lavishly with borrowed funds because the USA’s debt has been considered maximally safe. United States treasury bonds are the benchmark of safety; all risks are relative to T-bonds. The US federal government thus enjoys a zero risk premium on its debt, in contrast to corporations that must pay extra to get buyers to hold corporate bonds rather than federal debt.” (08/19/08)