Apr

27

 And yet when the Fed decreases its debt holdings, it is not somehow magically paying off the debt but only selling it to someone else. If that is the case, then won't the lovely future GD predicts depend on Secretary Mnuchin finding an extra $400B from somewhere other than Aunt Janet's piggy bank?

George Zachar writes: 

That's right…when the Fed stops rolling over its debt holdings to shrink its balance sheet, the debt will need 'fresh money' buyers.

The bear story is more debt on the market pushing up yields. The bull story is the presence of "natural" buyers needing "risk free" assets…a category that conveniently includes US financial institutions forced to buy them due to increasingly rigorous regulations.


Comments

Name

Email

Website

Speak your mind

Archives

Resources & Links

Search