No, I see the same thing, just from a backward angle. I’m worried about saturating the bond market. We’ve already had some scares in the auctions. I think we’re close to the day when everyone says ‘No more please sir.’
You bring up a second point that I didn’t want to. I thought it might muddy the message.
Just to be clear to everyone reading this, the cost of servicing the debt is dependent on interest rates, short term or long term, depending on how the auction is set up. Our current costs of servicing the debt are low because the Fed is keeping interest rates down. If inflation starts to kick in and the Fed wants to raise them, it may decide not to because that would (almost) automatically put us in default on the debt. If investors suspect that may happen, they will demand a premium interest rate from the Treasury which would have the same effect, put us in default.
There are not a whole lot of ways to get out of this.
You bring up a second point that I didn’t want to. I thought it might muddy the message.
Just to be clear to everyone reading this, the cost of servicing the debt is dependent on interest rates, short term or long term, depending on how the auction is set up. Our current costs of servicing the debt are low because the Fed is keeping interest rates down. If inflation starts to kick in and the Fed wants to raise them, it may decide not to because that would (almost) automatically put us in default on the debt. If investors suspect that may happen, they will demand a premium interest rate from the Treasury which would have the same effect, put us in default.
There are not a whole lot of ways to get out of this.
You bring up a second point that I didn’t want to. I thought it might muddy the message.
Just to be clear to everyone reading this, the cost of servicing the debt is dependent on interest rates, short term or long term, depending on how the auction is set up. Our current costs of servicing the debt are low because the Fed is keeping interest rates down. If inflation starts to kick in and the Fed wants to raise them, it may decide not to because that would (almost) automatically put us in default on the debt. If investors suspect that may happen, they will demand a premium interest rate from the Treasury which would have the same effect, put us in default.
There are not a whole lot of ways to get out of this.