The new, nonsensical term in the media: "Pre-Finance"

On a blog written by CNBC commentator, Paul Kedrosky, he writes:

Treasury Trying to Pre-Finance TARP, etc.?

"While the U.S. Treasury’s current capital needs are undeniable, its just-announced Q4 fund-raising plans are epochal. Is it trying to fully pre-finance current plans, knowing full well that yields are going to rise as struggling U.S. creditors find other, higher uses for the same capital over the coming months?"

This statement, once again, displays a complete lack of understanding of government spending, monetary operations, etc. The inferrence on the part of Mr. Kedrosky is that the government is now trying to raise the money needed for bailouts and other measures. Hence the term, "Pre-Finance."

The risk, according to Kedrosky, is that the government, cup in hand, might be turned away by investors who prefer to find, "other, higher uses for the same capital."

Mr. Kedroskly clearly does not understand that more than half of the $700 billion bailout has already been put in the banking system (the result of simply, magically, crediting reserve accounts), so "selling" $100 billion or so of securities is no problem at all. Indeed, with interest on reserve balances currently paying a paltry, 0.65% rate, it won't be difficult at all finding investors willing to swap a low-yielding reserve balance for a higher yielding Treasury.

Lesson to Mr. Kedrosky: The government spends first (by crediting bank accounts) then sells securities later. The "sale" of securities is nothing more than a reserve maintenance operation.