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How much debt can we accumulate before entities stop buying our bonds and treasuries?

api 6y ago
Everyone else is accumulating debt too. To escape a bear, you just need to run faster than everyone else not faster than the bear.
- tastyfreeze 6y ago
  The only problem is the bear is tireless and insatiable. It will get everybody. Gotta kill the bear.
- cheaprentalyeti 6y ago
  Since China actually manufactures stuff they'll accumulate debt slower. The US is more likely to be eaten by the bear.
  - cheaprentalyeti 6y ago
    Postscript: the abandonment of manufacturing, among other things, has really impacted race relations and class relations and pushed the US into a pre-revolutionary condition, which outside actors can use to further damage what's left of US manufacturing. I think the US Dollar is going to crash. You can't say this in polite society, or silicon valley, but you can say to invest in Bitcoin because it's a superior ponzi scheme to all the rest.
    - raziel2701 6y ago
      China may devalue their currency in order to achieve inflation (their CPI is falling). Doing so would strengthen the dollar. I'm honestly not sure about about the dollar bull/bear case, situation is not very clear to me.
RobertoG 6y ago
This is from the article: "As of this year, the US Federal Reserve (blue line) now owns more Treasuries than all foreign central banks combined [..]" So, if your debt is to the Federal Reserve, how much debt can you accumulate before it's too much? Does the question even makes sense?
- conanbatt 6y ago
  The more the Fed has bonds in their balance sheet, the more fragile they are in an inflationary crisis. If inflation goes up and interest rates go up, the fed's bonds go down in value. If the fed balance sheet becomes too much in the red, they need to print to make up the difference, which means more inflation.
onlyrealcuzzo 6y ago
This has more or less happened already. The Fed is by far the largest buyer of treasuries right now. Total treasury supply has nearly doubled this year, and yet foreign owned treasuries is only up 2% - meaning The Fed has bought close to 98% of it [1]. There is no treasury market. There is only The Fed. Considering that this market is about 30% of the size of the entire US economy, this should probably concern people. That's a large part of the US economy to be price fixed. Especially when you consider this essentially fixes prices for the housing market. [1] https://seekingalpha.com/article/4379154-fed-is-almost-out-of-u-s-treasuries-to-buy https://seekingalpha.com/article/4379154-fed-is-almost-out-o...

api 6y ago

Everyone else is accumulating debt too. To escape a bear, you just need to run faster than everyone else not faster than the bear.

tastyfreeze 6y ago
The only problem is the bear is tireless and insatiable. It will get everybody. Gotta kill the bear.
cheaprentalyeti 6y ago
Since China actually manufactures stuff they'll accumulate debt slower. The US is more likely to be eaten by the bear.
- cheaprentalyeti 6y ago
  Postscript: the abandonment of manufacturing, among other things, has really impacted race relations and class relations and pushed the US into a pre-revolutionary condition, which outside actors can use to further damage what's left of US manufacturing. I think the US Dollar is going to crash. You can't say this in polite society, or silicon valley, but you can say to invest in Bitcoin because it's a superior ponzi scheme to all the rest.
  - raziel2701 6y ago
    China may devalue their currency in order to achieve inflation (their CPI is falling). Doing so would strengthen the dollar. I'm honestly not sure about about the dollar bull/bear case, situation is not very clear to me.

RobertoG 6y ago

This is from the article: "As of this year, the US Federal Reserve (blue line) now owns more Treasuries than all foreign central banks combined [..]" So, if your debt is to the Federal Reserve, how much debt can you accumulate before it's too much? Does the question even makes sense?

conanbatt 6y ago
The more the Fed has bonds in their balance sheet, the more fragile they are in an inflationary crisis. If inflation goes up and interest rates go up, the fed's bonds go down in value. If the fed balance sheet becomes too much in the red, they need to print to make up the difference, which means more inflation.

onlyrealcuzzo 6y ago

This has more or less happened already. The Fed is by far the largest buyer of treasuries right now. Total treasury supply has nearly doubled this year, and yet foreign owned treasuries is only up 2% - meaning The Fed has bought close to 98% of it [1]. There is no treasury market. There is only The Fed. Considering that this market is about 30% of the size of the entire US economy, this should probably concern people. That's a large part of the US economy to be price fixed. Especially when you consider this essentially fixes prices for the housing market. [1] https://seekingalpha.com/article/4379154-fed-is-almost-out-of-u-s-treasuries-to-buy https://seekingalpha.com/article/4379154-fed-is-almost-out-o...