That's one reason why I'm stocking up on toilet paper. Get it while it's still affordable. (I'm only half joking).
I’ve never seen a real T-Bill. Do you think it would work as TP? Would it hurt my septic?
>>”The Fed is buying 61% of our own debt.”
That’s one reason why I’m stocking up on toilet paper. Get it while it’s still affordable. (I’m only half joking).<<
It’s even worse than it looks because the debt the Fed is concentrating on purchasing is composed primarily of the longer maturities. Thus, while the U.S. Treasury is able to brag that they are extending the maturity of the debt (to a whopping 6+ years in average—but still lower than it was several years ago), the Fed has more than offset that strategy by purchasing most of the longer maturities that the Treasury has issued during Obama’s presidency.
Since the Fed is part of the government, this means that the maturity of the government debt held by the public has decreased significantly, not increased. Furthermore, if interest rates really jump, on the order of Spain or, heaven forbid, Greece, the Fed will find its holdings massively underwater, on the order of hundreds of billions of dollars underwater, not millions...billions. Meanwhile, the publicly-held debt will need to be rapidly rolled over at significantly higher interest rates, blowing a massive hole in any of the current budget predictions.
That said, the eventual outcome might not be a massive inflation (though that would be my best guess); it could be a serious depression instead, accompanied by deflation. Essentially, the current Fed chairman has no clue about how to extract himself from the mess he’s created, but that extraction isn’t likely to be pretty. A soft landing is the least likely outcome.