or:Where is the money going to come from?
CBO projecting $1.2T deficit, $1T stimulus for the next 2 years, Obama saying that we will have years of $1T deficits. So say $5-6T total debt (remember this is US national debt only) needed to be financed just during his 1st term assuming no additional stimulus needed (unlikley) and deficits being held in check at $1T (also unlikely given how badly the states will need help).
I know everyone just assumes that China is a bottomless money pit that can be tappeed at will, but last I read they only have about $2T in foreign reserves and are spending it on their own projects and on assets other than US debt.
So my question is, where is the money going to come from to finance this historic issuance. Not to mention all the pent up muni and corporate issuance, nor the debt issuance from other nations.
The Germans couldn't even raise $6B euros this week at current rates! There is some $3T that is going on the block this year, 3X more than last year, just who is going to buy this stuff! What are they going to want to be paid to hold this asset class?
Its all very well for the Fed and CBs to keep the cost of money artificially low but as we all know artificially low prices result in shortages and it seems that this is what is starting to happen, a shortage of money willing and available to buy debt.
I don't see how we can print out way out of this, growing our way out of it doesn't seem like an option that will be available anytime soon, so it seems commonsense to me that the only viable option is for rates to rise and substantially.
CBO projecting $1.2T deficit, $1T stimulus for the next 2 years, Obama saying that we will have years of $1T deficits. So say $5-6T total debt (remember this is US national debt only) needed to be financed just during his 1st term assuming no additional stimulus needed (unlikley) and deficits being held in check at $1T (also unlikely given how badly the states will need help).
I know everyone just assumes that China is a bottomless money pit that can be tappeed at will, but last I read they only have about $2T in foreign reserves and are spending it on their own projects and on assets other than US debt.
So my question is, where is the money going to come from to finance this historic issuance. Not to mention all the pent up muni and corporate issuance, nor the debt issuance from other nations.
The Germans couldn't even raise $6B euros this week at current rates! There is some $3T that is going on the block this year, 3X more than last year, just who is going to buy this stuff! What are they going to want to be paid to hold this asset class?
Its all very well for the Fed and CBs to keep the cost of money artificially low but as we all know artificially low prices result in shortages and it seems that this is what is starting to happen, a shortage of money willing and available to buy debt.
I don't see how we can print out way out of this, growing our way out of it doesn't seem like an option that will be available anytime soon, so it seems commonsense to me that the only viable option is for rates to rise and substantially.
