johnm h Wrote:
Jan 21, 2013 1:28 PM
Their share has decreased but the absolute amount has gone up, but most important, and it is consistent with what you say, is that had the Fed not bought up the debt, interest rates would have to go up for the Treasury to sell the debt here and abroad and since the total debt has increased, the debt overhang and therefore the interest rate that will result from selling treasuries will be higher than it would have been. The Fed is financing the takeover of the economy and by doing so makes us more vulnerable; so vulnerable that only stagnation can prevent run away inflation or an interest rate spike that would allow markets to clear and the real position unambiguous.