Carefully read the following from Chuck Butler:
Did you know that in 2011, The Fed purchased 61% of the total net Treasury obligations that were issued? Prior to 2008, the amounts that the Fed would purchase were negligible at best!
Deficits are not being reduced in the US. This year will be equivalent to last year. Future years are not expected to be any better. The world recognizes that the fiscal situation is out of control. Their confidence in our bonds is decreasing rather than increasing. If the Fed purchased 61% in 2011, it is likely to have to purchase even more in 2012. Mr. Butler continues:
So remember when people that should know better would spout off about how the rest of the world doesn’t care how much debt the US builds, because they buy all our debt? Shoot, even former Fed Vice Chairman Alan Blinder said, “If you look at the markets, they’re practically falling over themselves to lend money to the federal government.”
Apparently Alan Blinder thinks our Federal Reserve is purchasing these Treasuries because it doesn’t want nasty foreigners to get such great investments. Surely it must be something like that or why would it be happening?
The reality is that the Federal Government cannot sell the debt it needs to sell at today’s interest rates in credit markets. Markets understand that the US is becoming a dangerous credit risk. Egan Jones, a credit rating service, just lowered the US credit rating again and has a negative outlook for the future.
The US government has reached the point where it cannot pay for its level of spending via tax revenues or market-based Treasury sales. There are only three courses of action available