Paulie
Diamond Member
- May 19, 2007
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Lawrence Goodman: Demand for U.S. Debt Is Not Limitless - WSJ.com
This isn't a problem as long as we can continue to strong-arm nations into using the USD for trade. Money for all that war is limitless, because we can continue to print it and fund the wars.
It's all good, because Bernanke is a prodigy...a genius...he'll figure out how to exit from all of this money creation before inflation becomes a problem.
Just trust him.
The recently released Federal Reserve Flow of Funds report for all of 2011 reveals that Federal Reserve purchases of Treasury debt mask reduced demand for U.S. sovereign obligations. Last year the Fed purchased a stunning 61% of the total net Treasury issuance, up from negligible amounts prior to the 2008 financial crisis. This not only creates the false appearance of limitless demand for U.S. debt but also blunts any sense of urgency to reduce supersized budget deficits.
Still, the outdated notion of never-ending buyers for U.S. debt is perpetuated by many. For instance, in recent testimony before the Senate Budget Committee, former Federal Reserve Board Vice Chairman Alan Blinder said, "If you look at the markets, they're practically falling over themselves to lend money to the federal government." Sadly, that's no longer accurate.
This isn't a problem as long as we can continue to strong-arm nations into using the USD for trade. Money for all that war is limitless, because we can continue to print it and fund the wars.
It's all good, because Bernanke is a prodigy...a genius...he'll figure out how to exit from all of this money creation before inflation becomes a problem.
Just trust him.