Of course, the powers in Washington and their loyal media prefer to present this with a happy face by showing the public that deficits for the current year are not going to be as disastrous as predicted just weeks ago. Instead of the $455 billion deficit, we can now take heart in the fact that the deficit for fiscal 2003 may only be slightly above $400 billion. Isn't that wonderful?

I don't think there's a connection, but the Bush Beans television commercial is simply too analogous to resist—let's roll that wonderful bean footage. The secret family recipe is known only to the faithful dog Duke "and he's not talking." But there's a large field sign that from the air reads "secret family recipe for sale. Contact Duke."

In real life, we are the family being sold out. And we are left to determine whether it's UFOs, the over extension of big mortgage houses like Fannie Mae hedging too much in derivatives, the devaluation of the dollar to foreign currency, or investors losing faith in the American taxpayer's ability to continue paying interest and principal.

In a previous article titled "$2 Billion A Day, where's it going?" I outlined the controversy surrounding the possible decline in the sale of treasuries. You might want to review that article before reading further.

So far, in the month of August, treasury sales have declined from $2.6 billion a day borrowed in July ($81 billion in total) to $1.2 billion per day so far in August (as of Monday, the 25th). That's a drop of more than half, and it is doubtful things are going to change much in the next five days or so.

Let's get specific.

On July 31st, the U.S. Treasury put (tendered) $44.9 billion worth of 2-year notes on the "auction" block at an annual interest rate of 1.5 percent and only $25 billion were sold (accepted). The Federal Reserve picked up another $4.9 billion of these notes for a total of $29.9 billion sold. That's two-thirds the offering.

On August 15th, the Treasury put $44.7 billion worth of 5-year notes on the block at 3.25 percent interest and only $18 billion were sold. The Federal Reserve picked up an additional $3.4 billion worth of these notes. That's less than half the offering.

Also on August 15th, the Treasury put $35.7 billion worth of 10-year notes on the block at 4.25 percent annual interest and only $18 billion were sold. Here, the fed picked up $2.5 billion more.

In its huge mix of "something for everyone" in bonds, bills, notes, and savings bonds available in flavors from two weeks to ten years maturity (the long term 30 year bond no longer exists), the Bureau of Public Debt, run by the little known and never interviewed Mr. Van Zeck, is constantly selling securities to replace those maturing at the rate of more than $5 billion a day while also issuing new securities to add to our ever increasing national debt.

The Federal Reserve's role in picking up securities that do not sell to investors at auction, and holding those which do not then sell through the fed's ten subsidiary banks, also raises many questions about fiat money, devaluation of the dollar, and inflation when the big utilities and others following this action raise their prices accordingly.

I suppose we should be thankful that, as they have in the past, the Federal Reserve isn't picking up all of the securities that don't sell to investors. It's bad enough that the fed currently holds more than 17 percent of the national debt.

In the past, raising interest rates has always worked to tempt and entice investors. Such raises are already happening with ramifications to the mortgage market despite Greenspeak's prime lending rate of merely one percent.

In a radio address on August 9, 2003, Representative Charles W. Stenholm (D-Texas) gave us another of the rare truths about Social Security when he said: "The President's budget office recently projected that the budget deficit will be more than $450 billion this year and $475 billion next year, even with the spending levels and economic assumptions in the President's budget. Staggering as they are, those numbers understate the true magnitude of our problem because they do not include money borrowed from Social Security and other trust funds."

Wherever we end up at the close of fiscal 2003 on September 30th, you can add at least $150 billion to the deficit figure you will be presented, Enron style, from the Bush administration. You will then have the real deficit. A world record.

Finally, if the "bond market" continues to decline we will have destroyed a valuable constitutionally authorized method of raising emergency money. And if it slips beyond the point where we are merely adding more horrendous debt on the shoulders of our children and grandchildren, but gets to the point where we can no longer keep pace with the immediate replacement of maturing debt, then we are in deep doo-doo. It's called the road to bankruptcy.

How long do you think investors can continue to have faith in the taxpayer's ability to pay them back when people aren't working or aren't working on much more than the products and promotion of war?