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> By the end of QT Non-Fed investors should hold $2t more Treasuries as Fed holdings decline by $2t. Who, exactly, is going to foot the bill? China? Hell no.
by pphysch 5y ago
> By the end of QT Non-Fed investors should hold $2t more Treasuries as Fed holdings decline by $2t.
Who, exactly, is going to foot the bill?
China? Hell no. They did partly in 2008, and they got Obama-Hillary "China pivot" and Trump's trade war as a reward, and who knows what else.
Japan? Maybe a little more (they are currently #1 US debt holder at $1.3T).
Europe? Amid a sanctions-driven economic crisis?
Big Tech?
I don't see a way out.
- nostromo 5y agoThe only way out is to cut spending. The Fed is sending a signal to congress.
- snuxoll 5y ago> Who, exactly, is going to foot the bill? Remember that the vast majority of US government debt is held by....the American public. The Fed was buying treasuries that normal investors would have to regulate rates, it's not like suddenly there's 0 demand domestically for US bonds. If the Fed wants to take a haircut and start offloading their balance sheet at a discount I'll happily throw a treasury ladder together in my retirement account, stock market gains are about to get incredibly volatile and I'll take a guaranteed yield over what I predict to be a major correction in the making.
- pphysch 5y agoAccording to some napkin math, the average American household would need to buy ~$20k in bonds over the QT period. This is on the order of the average amount of savings/investments per household.
- gniv 5y agoDomestic investors and banks, I suspect. Me personally I'm thinking of buying 2-year notes once they reach 3%.