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Pittsburg, Kansas | The bonds are sold at auction. What if there are not enough buyers? Lower demand means takes more incentive to get more buyers.
So who buys when few want the product? And how much incentive (effective interest rates) will it take?
And what happens if/when the buyer of last resort is just monetizing the debt rather than it ever being paid back?
And there is where the rub will come in. When painted in a corner, hard to get out without getting messy. QE has been painting the room into a corner for quite a while. Now the question becomes how does the Fed get out of the corner? No easy routes. Making the international reserve currency into a weapon has not increased the desire to own US bonds by everyone. What if more want to sell rather than buy? Will there be enough buyers to keep interest low?
I don't know the answers. I'm not sure the Fed does either. Oh, they probably know. Just don't like the potential answers. | |
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Increasing interest rate to stop inflation????
