(08-07-2011, 06:17 AM)kandrathe Wrote: Um... Like other government ponzi schemes, it's the Fed who are buying the bulk of t-bills (and hiding their true holdings). Now, convince 10 of your friends to buy t-bills... China and "smart" investors are clearing out of their US bond holdings, and most of our debt is in 90 day issue and not long term. Not good... definitely not good.
Horsepuckey. First, it's not a ponzi scheme. It shares nothing in common with a ponzi scheme. That's just a scary word people use when they want to frighten the horses. Second, that article is from 2009, which in post-crisis US bond terms, is pretty much the stone age. QE1 and QE2 are dead and gone - and yet, bond prices have gone *up*. If the markets were dumping US Bonds, then the instant QE2 ended, they would have crashed. Did they? Not even close. Most of the debt is 90 day? Great! 3 month yields are ... 0.02! Like, free fraking money. The US could go to Vegas on the defense budget, and markets wouldn't so much as blink. Don't take my word for it - these are actual, honest to god, up to date, bond prices.
I await movement in the opposite direction. Record highs do not stick around forever. But this is not the Fed keeping this afloat. That's what QE is, and they aren't doing any more of it right now - yet no crash.
-Jester