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The Biggest Owner of Debt Is You!
Let's see how long can The Federal Reserve can service it's debt without monetizing it if China decides to sell their shares off? [:D] Of Course it's all a house of cards anyway.
The Bric's are soon to drop the petrodollar and The Federal Reserve will not be able to monetize our debt anymore. If they step in to buy then the cat will be out of the bag. Interest rates could skyrocket soon as the ships takes on water! Bet on it!
serf
https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124
As the nation's central bank, the Federal Reserve is in charge of the country's credit. It doesn't have a financial reason to own Treasury notes. So why did it double its holdings between 2007 and 2014?
That's when it ramped up its open market operations by purchasing $2 trillion in Treasurys. This quantitative easing stimulated the economy by keeping interest rates low. It helped the United States escape the grips of the recession.
Did the Fed monetize the debt? Yes, that's one of the effects. The Fed purchased Treasurys from its member banks, using credit it created out of thin air. It had the same effect as printing money. By keeping interest rates low, the Fed helped the government avoid the high-interest rate penalty it would incur for excessive debt.
The Bric's are soon to drop the petrodollar and The Federal Reserve will not be able to monetize our debt anymore. If they step in to buy then the cat will be out of the bag. Interest rates could skyrocket soon as the ships takes on water! Bet on it!
serf
https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124
As the nation's central bank, the Federal Reserve is in charge of the country's credit. It doesn't have a financial reason to own Treasury notes. So why did it double its holdings between 2007 and 2014?
That's when it ramped up its open market operations by purchasing $2 trillion in Treasurys. This quantitative easing stimulated the economy by keeping interest rates low. It helped the United States escape the grips of the recession.
Did the Fed monetize the debt? Yes, that's one of the effects. The Fed purchased Treasurys from its member banks, using credit it created out of thin air. It had the same effect as printing money. By keeping interest rates low, the Fed helped the government avoid the high-interest rate penalty it would incur for excessive debt.
Comments
So where did the Fed get the $2 trillion to purchase all those treasuries? From nowhere. The federal government decides what is and is not money, and they have delegated that authority to the Fed. The Fed can just say "it exists" and who can argue?
2 Trillion Dollars the Fed used to purchase Treasuries is not much of a big deal,, The Fed LOSING 9 Trillion, that's a big deal.