You're trying to save face by limiting your vast trillion dollar error to "banks" but it's better to cut your losses and move on
When real interest rates are negative
treasuries arent the best investment, and usually arent bought as such.
Three great Mistakes:
Moving all in Texas Hold Em with 2 red aces on a 5-6-7 spades board
Splitting 8's in Blackjack when the dealer has a 10 up
Putting up a pointless chart in the hopes of salvaging the last bit of credibility you might have had
Dude you have no argument but you just keep claiming im wrong. So just talk all you want
Im not limit my argument to banks just to "save face", banks buy large portions of our debt. Your argument basically revolves around individuals buying treasuries through treasury direct, which is a small portion of the overall treasury market.
And the chart does matter. It says something about the incentives of the market. If interest rates on T notes were higher than they are now, youd see the market behaving like you claim. But when nominal interest rates are basically 0, why would someone looking to invest and get a return invest in a treasury? Not only does it yield basically no interest, but you give up the benefit of liquidity, you cant buy gas with a treasury. Just about the only benefit of a treasury is the slight interest, to protect against inflation, which doesnt exist with cash.
Do you see the change that happens in the market when treasury interest rates drop so low? Starting to understand basics yet?
Besides, crowding out is numerically wrong on its face. To be technical, only about 53% of the money we borrow is borrowed from domestic investors (china is only like 12% so dont even pull that out). So at the very least you can say that government borrowing is an inflow of capital.
And ur wrong more still...
Your only looking at one side of the equation. Doesnt the government pay those bondholders back? The government is constantly borrowing from investors, but at the same time its always paying back previous ones.
