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> The Fed is not stepping in to buy more treasury bonds, so the private sector -- individuals, 401(k) plans, pension plans, endowments, mutual funds, etc. -- mu
by DirectorKrennic 3y ago
> The Fed is not stepping in to buy more treasury bonds, so the private sector -- individuals, 401(k) plans, pension plans, endowments, mutual funds, etc. -- must find additional liquidity somewhere to step in to buy the new bonds
The private sector doesn't "have" to do anything.
- Kye 3y agoAll but individuals and possibly possibly 401(k)s do, in fact, have to do something. They have targets to meet. They don't just sit on the money.
- cs702 3y agoIf the private sector doesn't step in to buy newly issued treasuries, you would have a failed US treasury auction!!!
- s1artibartfast 3y agoHowever, that isnt the motivation of the private sector. The private sector buys them because they want to returns.
- cs702 3y agoOf course. The private sector sets the price at each auction! The US Treasury HAS TO sell the bonds. It has no choice.
- s1artibartfast 3y agoCorrect, The US Treasury has to sell enough bonds to fill the budget deficit.
- eppp 3y agoThat clearly isn't true if it wishes to continue to exist.
- srj 3y agoThat's true but the treasury will price their interest rates to get buyers. If it goes high enough buyers will emerge unless there is nobody with faith in the government paying it back.