Friday, March 30, 2012

Fed monetizing US debt is increasing

With the government in full debt mode by its borrowing close to $150 billion a month just to cover current obligations, the Federal Reserve has been forced to go full bore in buying that debt, and monetizing government spending.

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 impression of limitless demand for U.S. debt but also blunts any sense of urgency to reduce supersized budget deficits.

What about Japan and China? Aren’t they the major purchasers of U.S. debt? Not any more, notes Goodman. Foreign purchases of U.S. debt dropped to less than 2 percent  of GDP (Gross Domestic Product) from almost 6 percent just three years ago. And private sector investors — banks, money market and bond mutual funds, individuals and corporations — have cut their buying way back as well, to less than 1 percent of GDP, down from 6 percent. This serves to hide the fact that the government can’t find outside buyers willing to accept rates of return that are below the inflation rate (“negative interest”) given the precarious financial condition of the government. - New American

Congress last year did not have the stomach to halt raising the debt ceiling, and it appears that they will not keep the debt from crossing $16 trillion by the time of the election.  As foreign entities such as China and Japan deal with their own economic downturns, and Europe is requiring bailouts not buyouts just to survive, the Fed will have no choice but to keep monetizing US debt to stave off collapse and default by the world's largest creditor nation.


If nothing is done about this, it could spell big trouble for the US economy. To be precise, the country could be looking at lower revenues, a higher unemployment rate, reduced GDP, and loss of millions in strategic business investment.

There should be a more proper way on handling this.

Awfully fast this website would be prominent amongst all the people, owing to its choosy content. best auto deductable

China and Japan are two of the most well-known countries in Asia. Japanese tends to be more monotone (although all letters aren't pronounced such as ii).Chinese cuisines tend to feature seafood less prominently unless they're. information Essay Help uk

This is a to a splendid degree illuminating article. I besides concur with your post title and your really well light up your perspective. I am staggeringly rich to see this post. A dedication of appreciation is all together for share with us. Keep it up and share the all the more most related post.
Essay Spot
Mind blowing work!

On the off chance that nothing is done about this, it could spell huge inconvenience for the US economy. There ought to be a more legitimate path UK Essay on taking care of this. China and Japan are two of the most surely understood nations in Asia. r post title and your truly well light up your point of view. I am staggeringly rich to see this post. A commitment of thankfulness is all together for share with us. much appreciated.

Last week I studies an article and I read that The CBO projected under scenario that the American debt apprehended by the community would growth approximately $8.5 trillion. I am fond of reading theoretical post because I offer Best Custom Essay Writing Service. Whenever I found conceptual topic so I deeply study that to enhance knowledge.

Post a Comment