Hang the Bankers
Central banks have been dumping U.S. debt at an unprecedented rate.
Last year, foreign central banks sold an astonishing $225 billion in U.S. treasury bonds. And now, just a few months into 2016, the rate of selling has increased, with central banks having already sold $123 billion in bonds.
Once regarded as a safe haven, the perception of bonds has changed in recent years, with much of the blame going to our Federal Reserve and a significant loss in confidence in the central bank. Now, the trend away from U.S. debt is becoming increasingly clear. And as nations continue to sell, we may be a snowball effect of more countries following suit — because no one wants to be the last ones left holding an asset that no one wants.
What happens when there is no one there to buy the debt except for the Federal Reserve? They are the buyer of last resort. Will they start feasting on their arm to save themselves? How long can they buy their own debt for before there is nothing left to chew on?
Read more
Central banks have been dumping U.S. debt at an unprecedented rate.
Last year, foreign central banks sold an astonishing $225 billion in U.S. treasury bonds. And now, just a few months into 2016, the rate of selling has increased, with central banks having already sold $123 billion in bonds.
Once regarded as a safe haven, the perception of bonds has changed in recent years, with much of the blame going to our Federal Reserve and a significant loss in confidence in the central bank. Now, the trend away from U.S. debt is becoming increasingly clear. And as nations continue to sell, we may be a snowball effect of more countries following suit — because no one wants to be the last ones left holding an asset that no one wants.
What happens when there is no one there to buy the debt except for the Federal Reserve? They are the buyer of last resort. Will they start feasting on their arm to save themselves? How long can they buy their own debt for before there is nothing left to chew on?
Read more
No comments:
Post a Comment