I've been taking a look at what happened to the demand for U.S. Treasury bills and bonds as a result of the financial crisis. Here's a summary of some of the data that I found interesting.
The Federal Reserve publishes flow of funds accounts that include estimates of who has been holding the debt issued by the U.S. Treasury at different points in time. Here's a pie chart showing the breakdown as of the end of 2007. At that time, almost half of the U.S. Treasury debt was owed to people or institutions outside the United States. The Federal Reserve and state and local governments held another quarter. Pension funds (combined private and federal, state and local government), mutual funds, and money market funds held another 15%. U.S. households played a very minor role in lending to the U.S. government, with holdings of only about 5% of the total debt.
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In the two years since then, U.S. Treasury debt has increased more than 50%. The chart below summarizes who bought all that new debt. Foreigners bought more than half of the net new debt issuance. But the Federal Reserve and state and local governments have barely increased their holdings of Treasury debt at all, meaning that other sectors significantly increased their share. In particular, money market and mutual funds increased their holdings of Treasury debt by 85% over the last two years. Banks increased their holdings by 146%, and households by 143%.
No one will be buying it, the money is lost for good.
ReplyDeleteI suppose an analogy would help outline an explanation for this and be able to predict what will happen (this being just one little thing we're facing).
A Hispanic man went camping with a black man and an asian woman. The asian could not speak English, the Hispanic guy was the kind you'd find in LA (dumbass highstrung druggy). The black guy was the friendly kind of mellow type of black man but didn't exactly have a fast working brain, he prefers other people to tell him what to think - he just wants to have a nice time.
They each arrived at the site they wished to make their camp. The Hispanic guy got out and started yelling obnoxiously like a girl for the black man to help him lift things and pitch a tent. The Asian lady stood to the side letting the men do the physical stuff, not that she could understand them anyway.
So as the week progressed they realized they were out of water and the car wouldn't start up to get to the town to buy some. A white man walked by and told them he could help, they agreed without any thought since the Hispanic and black man aren't smart... the Asian doesn't speak English remember?
After he helped them by giving them water and getting their car started he said, "You can call me and keep in touch." (since they mingled a bit throughout the time)
They are in his debt, they owe him big time. (well not that much). They kind of hung around him a few times but never payed him back, they started forgetting all about the favor he gave them. After a while he continued to give them more and more favors without any kind of reference. They more he did for them the more they decided it was inconsequential... it must be his nature to do things for people?
The Asian represented the child, the Hispanic the mom and the black guy the dad. The white guy is whatever the debt thing is. There is so deep a hole there it is like a black hole, who knows what is really in it? How many missing favors you think has been accumulated by now? Information just poofed away like smoke? Who really keeps score anymore? Did they ever? How could they?
We have several black holes growing on this planet; an spiritual/conscious one, an intellectual one, and a financial one. Black holes suck all the information from the energy source into it, it ceases existing in this dimension and begins reclaiming itself once it passes the event horizon (pinnacle/collapse). We've done this as a superconscious entity before (which is what our "universe" is) but what would happen at a smaller scale? I feel incredibly empty and numb yet I somehow feel heavenly and enlightened. I think my personality is dying and being replaced by Reality/Truth.
yea i know what your saying. I used to make 90,000 +
ReplyDeletea year. Now i,am lucky if i make 18 i have lost just
about everything but some how i feel closer to reality. I am not happy about being ripped off its just so clear now that virtually everything i have been told the last 48 years has been fabricated. The swills have created this huge bubble lived off of it for decades and now there cashing in there chips. Or should i say our chips.
Who will buy the 8 trillion dollars in new debt coming?
ReplyDeleteI will...You take Visa or Mastercard right?
Hmmmmm I kinda agree with 5:54...You know once you cut out all the metaphysical crap out of it.
ReplyDeleteSimply said...We all liked credit while we bought and bought and bought...We didn't care about how, when, why or who we owed it to...Then the credit dried!
Like an addict we needed more...Demanded more...But alas there was none because we could never pay back...At this point we've become a BAD Loan Risk...You know the brother/sister son/daughter who always need help but pay back in smidges.
The government pushed us over the edge but PERSONAL DEBT means PERSONAL RESPONSIBILITY...You wanted the Caddy, the house, the vacations, the big screen TV? Ok but there is a price due.
Get ready...Quit your bellyaching...Been poor been rich now soon will be poor again...Sucks for me but hey at least I KNOW what I did to get myself in the mess I'm in...What's your excuse?
Even now in the US we live waaaaay better than about 85% of the people in the world and you want them to feel sorry for us?...Simply put we Americans live off of other's products and resources...Just our Empire just like Romes, Greece's, Naploeon's France, WWII Germany and the USSR expanded too much and is now collapsing.