How long until the Fed becomes the number 1 buyer of American debt?

myp said:

After a treasury auction earlier this month, the Fed became the 2nd largest holder of US debt after China. It is only a matter of time before it surpasses China and becomes the number one holder of American debt. It truly amazes me how little people talk about this or care about this- perhaps because a lot of people simply don't understand it. Or maybe, it is because the political games of the two parties take center stage.

To put it in a nutshell, this is a huge problem. The Fed is essentially buying it's own debt as it continues to buy up whatever else it sees and continues the quantitative easing game. If people don't start waking up and the DC economists keep trying to save their asses in exchange for a potential collapse in the future then eventually everything will come crashing down. Think the economy is in shambles now? Wait until that happens.

Click to expand...

The clock keeps counting down to the day the US goes the way of the Soviet Union. You'd think they'd of learned that 1/2 baked 'reforms' and state-capitalism don't work but alas the gov't is run by poo throwing monkeys it seems.

David said:

The clock keeps counting down to the day the US goes the way of the Soviet Union. You'd think they'd of learned that 1/2 baked 'reforms' and state-capitalism don't work but alas the gov't is run by poo throwing monkeys it seems.

Click to expand...

There's no real comparison between the Soviet Union's collapse and the US with regard to debt.

No one buys soft currency. That's why the deal between Pepsi and Stoli was straight up commodity trade. Pepsi for vodka. You could buy Pepsi for kopeks anywhere. However, Coca-Cola struck a different deal. You could only buy it in hard currency stores (reserved for foreigners, those able to acquire hard currency and pull off appearing as a foreigner and those elbows deep in graft - quite common). Coke traded soda for gold. That still cracks me up.

State capitalism works in limited fashion but is, imo, ultimately uncontainable. There more the economy grows the more luxury good the people will demand, the greater access to information, the desire for liberty etc. There's is only so long that China can rely on absurdly depressed labor markets to support their economy.

This will continue until we are forced to address our debt by paying for it or defaulting. By that time we will likely only have one choice.

We cannot grow the economy out of the debt as we did with the debt Reagan ran up to run the Soviets into the ground.

We've cut taxes, not only failed to rein in spending but gone on a spree that defies comprehension. A trillion is not comprehensible. The difference between one and two trillion is a trillion though we see it as, "just one more."

That's why eight hundred billion dollar spending bills are largely met with a shrug. People don't get it.

Something must be done about the mandatory spending. Reforming Mandatory spending is the best way to bring down the deficit and the debt. Nobody wants to agree on what to cut, but it must be done, we need to cut funds from everything.