With 12-month treasury bond rates at 0% -- that's right, zero percent -- and the 30 year treasury bond rate at 4.3% it means it is a great time to borrow. It Does not mean the Government has to spend the money, just borrow it now when it is at the lowest rates ever. Who are these treasury bond holders? The biggest bond holder of all is Social Security, and Social Security is getting ready to cash in all those 14% bonds they bought (at 8 cents on the dollar) 30 years ago. It's a great time to roll that debt over, at these low rates.
You do realize the government is borrowing from itself right?
And what in the world would make you think that?
Your link is meaningless, considering it doesn't answer my question. You said government was borrowing money from itself?
The government isn't allowed to print money. The Federal Reserve Bank prints money. The Federal Reserve Bank isn't the government.
Again, the Federal Reserve Bank isn't the government. I don't care how many links you find, it would make no difference.
The Federal Reserve Bank prints money from thin air. The Government(Federal and/or State) cannot print money. It is actually against the Law for Government to create money, in any form, other than gold or silver.
Edit: Just because the "New York Fed" is labeled what it is, doesn't make it a government agency. It's not.
We're borrowing from China and anybody else who's buying US government bonds.
The issue as I noted above is that China has very heavily reduced its US bond holdings and nobody else is keen to take it on - the word around the place is that the US is dangerously near losing the super-credit rating it imposed on world trade, which would be the start of a slippery slope and financial world waves that would come back redoubled on US financial shores.
What do you mean by "heavily reduced"? Reduced by how much? Over what period of time? How does this reduction compare to their average holdings over say the last 20 years?
Ameria's debt rating is not currently in danger and wont be if the government works out a deal on the debt limit with substantial cuts in spending and I believe they will.
I understand they are cutting their holdings of US debt by 2 trillion - which is more than a little significant. Their holdings have steadily increased over the last few years but they are diversifying (I believe is the official talk) over many different currencies and countries.
The pressure comes because your biggest debtor, Japan, already has as much as it can stand and is now suffering economic slowdown itself and the recent earthquake and tidal wave impact on its economy. Nobody else seems keen to take on more US debt - which leaves the door open for severe pressure on the dollar to sink to its underlying correct level without the aggressive support that it is accustomed to - due to lack of money. In other words you are at the debt limit but must borrow more and so escape this interally which will cause inflation and a re-adjustment of your economy to its real level as net importer for over 20 years - in plain terms you have maxed out your cards, sold the family silver and are living beyond your means.
Treasury bonds are the government's way of borrowing. They write an IOU. You give up your cash. A 12 month bond rate that pays no interest is a warning flag. It tells me we are so hampered by government regulations, punitive taxes, and an impossible to understand tax code that very few are starting new businesses.
U.S. Government should borrowing a lot more money? I can only assume that you missed out on typing "be" in your sentence.
What you apparently fail to realize is that government can only borrow money, because it's never created nor has it ever been meant, to create a surplus. The Economy is debt based. If the borrowed money doesn't create money, then it actually does no good.
Too many politicians taking what they want from the money spent, instead of funding the necessary things that should be funded in the first place.
What the public and apparently politicians fail to see is that many prices are going higher. Government claims to be holding back inflation, but is actually destroying the Economy. It redistributes wealth among the upper 1% while the other 99% try and figure out, how to hell to live.
One of the only government owned national banks in the world, is and maybe to be was, in Libya.
There is only internal borrowing left it would appear. The manoevres discussed here are about borrowing from your future, last time around the money was removed (stolen) from pension funds among other places and from future assets which put the mortgage rate higher to pay for it.
The US can't borrow any more externally as there is little cash out there to borrow and what there is will not be invested in the US. The big free money has just been withdrawn with China reducing its stake in the pot by a couple of trillion dollars and Japan the traditional lender with its own troubles.
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And what does it mean for us?
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