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To: expat_panama

“We also know that out of the total $60T U.S. debt market that the Federal Reserve holds $4T. This means that whatever control the Feds have over interest, the private free markets control fifteen times as much control”

It’s always been the case that the private sector bondholders, aka ‘the bond vigilantes’, have more control over long term interest rates than the Fed when they choose to use it. I recall them demonstrating this back during the Carter administration.

I suspect that one of the larger influences right now is China investing their dollar holdings in Treasury bills. This has the same effect as QE did on dampening US interest rates although I don’t think that they are doing it for that purpose.


12 posted on 09/03/2016 1:40:00 PM PDT by Pelham (Best.Election.Ever)
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To: Pelham
private sector bondholders, aka ‘the bond vigilantes’, have more control over long term interest rates than the Fed

It's a matter of scale, that over 300 million people loaning and borrowing $60T has got to mean more than their hired government workers who are loaning out $4T.  That said, I really can't understand why you'd say that some ten year old kid selling a savings bond is what you'd call a "bond vigilante".  

one of the larger influences right now is China investing their dollar holdings in Treasury bills

It depends what it's 'larger' than.  China holds about a 1/16th of the total federal debt, as compared to say, the 2/3 owned by Americans.

15 posted on 09/03/2016 6:15:27 PM PDT by expat_panama
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