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As always in economics, everything is connected and nothing is limited to a singular cause or effect -- except in textbooks. In the simplest case, so long as the Treasury sells bonds for dollars, it is sopping up liquidity. Of course, in other transaction, Treasury may create and issue new dollars and add to liquidity. Part of the reason why the dollar is trusted is that the accounts are regularly made public so the net effect can be known by anyone who wants to find out.

As for long terms bonds, the world's demand for both dollars and prime quality US Treasury debt has increased over time and will continue to increase due to the growing US and world economies and lengthening lifespans and working careers. That being so, issuing ultra long term US Treasuries in good times is a way to accomplish several objectives: sop up potentially destructive dollar liquidity that is now parked in negative interest rate accounts; capture some of the projected long term increases in dollar and US debt demand in order to help finance current US spending; and balance out the supply of Treasuries of various maturities.

I think that above all, the Treasury, the Fed, and the world's major central banks do not want the holders of dollars and other currencies now held in negative interest rate accounts to go on the prowl for a decent rate of return and thereby disrupt the world's equity and currency markets while squandering value.

For example, in the 1980s, Japan's economy was roaring along and her banks were stuffed with dollars held at dismal interest rates. Looking for better returns, Japan's banks went on a lending spree and imprudently financed foreign and domestic real estate purchases at escalating high prices. In nominal terms, a square mile of downtown Tokyo was even said to be worth more than the entire state of California.

As the old saying goes, what cannot last does not last. By 1990, Japan's banks were broke as domestic and foreign real estate values returned to historic norms and imprudent loans could not be serviced by the borrowers. The effects of this so-called balance sheet recession continue to this day, compounded now by Japan's demographic crisis and other issues like foreign competition in manufacturing and the damage done by the Fukashima reactor meltdown.

My guess is that the holders of long term deposits at negative interest rates were consulted as to why they were not buying any of current US Treasury offerings. They probably responded that the maturities currently offered were not long enough. The Treasury's team of analysts were then tasked with capturing this market in a way that would maximize US financial and economic gains.

As much as we see looming dangers and worry over America's future, the record of the last century is that we meet our challenges and go from strength. For the US to be able to consider the sale of ultra long term bonds is a sign of strength.

Moreover, the Fed and Treasury performed better during the recent financial crises than is commonly understood. They avoided the mistakes that caused the Great Depression and now, with the pro-business Trump in office, we have boom times that by some measures exceed those of the Reagan era. Japan and the Eurozone do not come across well by comparison.