In a tacit admission that the Obama administration is concerned with its ability to borrow enough money to fund its spending, Secretary of State Hillary Clinton was in China this weekend... effectively begging the Chinese to continue buying U.S. Treasury bonds. That is to say, begging the Chinese to keep lending us money.

http://www.cbsnews.com/stories/2009/02/22/world/main4818429.shtml

U.S. Secretary of State Hillary Rodham Clinton wants China to continue investing in the United States because the two countries' financial futures are closely tied together.

"I certainly do think that the Chinese government and central bank are making a smart decision by continuing to invest in Treasury bonds," she said during an interview Sunday with the popular talk show "One on One." "It's a safe investment. The United States has a well-deserved financial reputation."

To boost the economy, the U.S has to incur more debt, she said, shortly before departing for Washington. "It would not be in China's interest if we were unable to get our economy moving," Clinton said. "So by continuing to support American Treasury instruments, the Chinese are recognizing our interconnection. We are truly going to rise or fall together. We are in the same boat and, thankfully, we are rowing in the same direction.

"Our economies are so intertwined, the Chinese know that to start exporting again to their biggest market, namely the United States, the United States has to take some very drastic measures with this stimulus package, which means we have to incur more debt."

The very fact that the U.S. has to have the Secretary of State reassuring not just China, but the whole world that U.S. Treasury's are "safe" and that the U.S. has a "well-deserved financial reputation" is actually quite worrisome. The further explanation that the Chinese need to keep loaning us money so we can borrow it so we can spend it on Chinese goods is worrisome, too.

This goes back to something I wrote about a week ago: Where are we going to borrow all the money necessary to engage in all of this spending? It seems clear that the Obama administration must be asking itself the same question. Why else would they have the Secretary of State out there trying to make the case for the world buying more U.S. debt?

The most likely answer is that we'll borrow as much as we can from the Chinese and the rest of the world, raise as much money as we can from domestic sources, and the difference will be made up by the Federal Reserve buying government debt... which is effectively printing money. And the end result will be higher inflation and higher interest rates.