samhill wrote:Apprently you know the process so why don`t you enlighten everyone, the selling of treasury notes or bonds or whatever you want to call them has been going on for decades. I have never been in the position to bid on yet alone buy one.
You're the one saying to just spend, spend, spend!
You should know where your plan gets us before you advocate for it.
As long as you have a few suckers to buy your debt, and you actually produce enough wealth to continue to foster faith in your ability to pay, then countries and other entities will buy the T bills.
But as has been pointed out, the Fed has been buying most of our debt lately.
Let me try to illustrate how insane that is.
Imagine you go to a bank and want to buy a car. They'll give you the loan if you have some collateral. Some money to put down a on it first. You tell them you don't have any money so the bank loans you the money to use as collateral to get the car loan.
Or you can look at it like those 80/20 mortgages that they were handing out a few years ago.
The government sells treasury notes and has to pay interest on them. The more demand there is for them, the lower the interest rate they pay.
Lately, the demand has been so low, we would be forced to pay an unacceptably high interest rate.
When we do sell them, we take them to the Fed and use them as collateral for the really big loan.
But due to the demand situation, we really don't want to sell too many, which means we can't take nice big loans from the Fed. So to "help" us out, the Fed has been buying a large portion of the treasuries to simulate demand and keep the interest low.
This does two things, it increases the amount of money we owe to the Fed because we owe interest on the treasury sale, and we owe on the loan we took after the sale.
And it also chases away legitimate buyers because they know they are getting screwed on the interest rate and they take their money and go buy something else.