Who Bought the $6.5 Trillion in Treasuries Piled on the Incredibly Spiking US Debt in 22 Months? Who

[Free Vulcan]

The foreign bond holder sits in a very different position than a domestic one.

Any holder of an existing bond will see that instrument lose value if interest rates spike, opening the door to them selling that bond reducing the prices, and making rates spike even higher.

But the foreign bond holder also generally will convert the proceeds back to their currency, which they acquire by selling dollars, which drives down their price as well.

This entangles current holders of the dollar, because now they're assets are losing price too.

Do that enough and all US paper assets denominated in dollars, such as stocks and commodities, start losing value, which opens the door to a broad selloff of all those assets and massive cascading crashes across the board if there is a panic.

That can then snowball to multiple consequences which can reverberate into the real economy, real fast with very negative and possibly cataclysmic effects much like the fallout from the '29 crash, except on a huge multiple v. back then.

We are playing a very dangerous game with all this sudden explosion of debt.

[jmyrlefuller]

We own what they paid us to start with.

They own nothing except what we choose to pay back.  What do you believe they can do about it anyway?

You act as if we will need to eat Chinese food if they tell us to

Or, you know, they can always unleash yet another deadly, unvaccinatable airborne virus on the world.

[DB]

All the debtor's braggadocio on this thread is rather revolting.  Sounds more like a liberal modern monetary theory meeting.

Borrowing beyond one's means is deadly to both ends of the transaction.

But the truth is we are not borrowing anymore. Few were buying that debt. We're printing dollars instead.

When governments do that, their monetary system has failed.

[DB]

The foreign bond holder sits in a very different position than a domestic one.

Any holder of an existing bond will see that instrument lose value if interest rates spike, opening the door to them selling that bond reducing the prices, and making rates spike even higher.

But the foreign bond holder also generally will convert the proceeds back to their currency, which they acquire by selling dollars, which drives down their price as well.

This entangles current holders of the dollar, because now they're assets are losing price too.

Do that enough and all US paper assets denominated in dollars, such as stocks and commodities, start losing value, which opens the door to a broad selloff of all those assets and massive cascading crashes across the board if there is a panic.

That can then snowball to multiple consequences which can reverberate into the real economy, real fast with very negative and possibly cataclysmic effects much like the fallout from the '29 crash, except on a huge multiple v. back then.

We are playing a very dangerous game with all this sudden explosion of debt.

Which is why it is better not to play the game... But it is too late for that...

[Hoodat]

When governments do that, their monetary system has failed.

When a government does that, the government itself has failed.

[sneakypete]

Pretty much HAS to be China. They are the only ones making any money these days,thanks to all the western manufacturing contracts they are getting,combined with the slave labor wage market they control.

[IsailedawayfromFR]

Or, you know, they can always unleash yet another deadly, unvaccinatable airborne virus on the world.

don't know about you, but I do not succumb to blackmail.

[sneakypete]

Or, you know, they can always unleash yet another deadly, unvaccinatable airborne virus on the world.

@jmyrlefuller

I am thinking/hoping they pretty much wore that one out in "one".

[roamer_1]

It isn't that complicated.   All we have to do is to stop spending money we don't have, and use the money we do have to pay our bills.  This ain't rocket surgery.

That's right. And it happens on many kitchen tables across this country every month!

[sneakypete]

Me!

It wuz ME!

Ah confess!

Mah plan is to use sum ob that monies to buy and then rent out Biden,Truedoo,and most of the US Congress and Senate as male whores to Arab Sheiks,African warloards,and the really old and ugly ones to US street pimps.

Under the condition they treat them REALLY rough,of course.

[Kamaji]

According to the OP, most of the outstanding debt is held by the U.S. government itself, principally in the form of government agency pension funds and the federal reserve.

[Hoodat]

According to the OP, most of the outstanding debt is held by the U.S. government itself, principally in the form of government agency pension funds and the federal reserve.

The pension/Social Security portion should be budgeted anyway, and the Fed portion will never be repaid.

[DB]

According to the OP, most of the outstanding debt is held by the U.S. government itself, principally in the form of government agency pension funds and the federal reserve.

IOU.

A number.

Literally backed by nothing more.

[Kamaji]

IOU.

A number.

Literally backed by nothing more.

So why not simply print more, with empty abandon?  After all, it's not really real debt if it's just "empty IOUs".  Modern Monetary Theory quite agrees.

[DB]

So why not simply print more, with empty abandon?  After all, it's not really real debt if it's just "empty IOUs".  Modern Monetary Theory quite agrees.

Because your currency becomes worthless.

Which is exactly what's happening.

[Kamaji]

Because your currency becomes worthless.

Which is exactly what's happening.

Then it's not a costless exercise, is it?

[DB]

Then it's not a costless exercise, is it?

My point all along is printing money out of thin air is the path to total economic destruction. And we are well down that road. Have been since Obama was elected.

[roamer_1]

My point all along is printing money out of thin air is the path to total economic destruction. And we are well down that road. Have been since Obama was elected.

no... Bush, 'Too Big To Fail' started the redoubling.

[Hoodat]

no... Bush, 'Too Big To Fail' started the redoubling.

Yes, the "Too Big To (allow to) Fail" mantra was complete bullshit.  But in Bush's defense, the original $350 billion was paid back to the Fed in full.  Bush's total deficit for 2008 was $400 billion.

[DB]

no... Bush, 'Too Big To Fail' started the redoubling.

QE was the beginning which started under Obama I believe.

QE was simply creating money with no buyers of the debt.

Debt was bad, QE is worse.

It is third world banana republic time and has only accelerated. When was the last actual federal constitutionally required budget?

[catfish1957]

QE was the beginning which started under Obama I believe.

QE was simply creating money with no buyers of the debt.

Debt was bad, QE is worse.

QE I, II, III, etc.  IMO was the governments cognizant  decision that if there was going to be any kind of dystopian economy, that they would choose hyperinflation vs. traditional equity crash.   QE basically was a can kicking down the road exercise, with the intent it will be someone elses' problem at some point.  Many of the best ecomomist have stated that they thought the tippng point was somewhere between $25-$28T sovereign debt.  We just passed 30.

We now reside in a country whose financial system amounts to a house of cards. How and where it tips is still a mystery.  But one thing is certain that in the proven theories of the cycles in the economic world.  Gravity  prevails at some point 100% of the time. 

Hate to be of doom and gloom, but when I also see world events that have dire consequences, I have to wonder.

[Kamaji]

QE was the beginning which started under Obama I believe.

QE was simply creating money with no buyers of the debt.

Debt was bad, QE is worse.

It is third world banana republic time and has only accelerated. When was the last actual federal constitutionally required budget?

I believe the first WE in 2008 started under Bush.

[catfish1957]

It is third world banana republic time and has only accelerated. When was the last actual federal constitutionally required budget?

My senator Phil Graham made a career on that crusade back in the '80's.  He kept in in the limelight, with not too much success.  He even tried to create enough stir to have a constitutinal amendment to address it.

Gingrich's '94 revolution toyed, with some improvement, but not total success.

Since?  Congress has been worse than a crew of drunk sailors in port with their paycheck money in their pocket, and we are now saddled with a 30 Trillion Dollar bill.

[catfish1957]

I believe the first WE in 2008 started under Bush.

Yep, a fact that didn't help McCain in November. 

[sneakypete]

My senator Phil Graham made a career on that crusade back in the '80's.  He kept in in the limelight, with not too much success.  He even tried to create enough stir to have a constitutinal amendment to address it.

Gingrich's '94 revolution toyed, with some improvement, but not total success.

Since?  Congress has been worse than a crew of drunk sailors in port with their paycheck money in their pocket, and we are now saddled with a 30 Trillion Dollar bill.

@catfish1957

Yup,and just watch the next President,who will without a doubt be a Republican unless the Dims are allowed to steal the election again,take the blame for the hyper-inflation and all the money he has to spend to meet our obligations.

The whole damn thing will get blamed on him,and the ignorant goobers that tend to vote Dim will eat it with a spoon.

We are sooooo screwed,and the saddest part is we have no one to blame but ourselves.