The Astonishing Increase in Holdings of U.S. Treasury Debt: Yet More "Yes, Sir John Hicks Told Me So" Weblogging
(2011) 2013: The Interest Rate That Did Not Bark in the Night: The Surge in U.S. Treasury Debt and the Non-Reaction of Rates: A U.S. government that had been paying back $240 billion a year at the start of the 2000s and issuing a net of $300 billion a year in the mid-2000s was suddenly issuing $1.1 trillion a year of bonds.
Back in the third quarter of 2008 I wondered: "Who is going to buy all of these things?" There were nearly $4.3 trillion of Treasuries held by the real public in mid-2008. But we were about to start adding to that at a pace of $1.1 trillion a year: $5.4 trillion by mid-2009, $6.5 trillion by mid-2010
$7.6 trillion by mid-2011--doubling U.S. Treasury debt held by the public in four short years.--and we are on track to have $10.7 trillion early 2014, an increase to a factor of 2.5 in less than five years.
Who I wondered back in 2008 would buy these things?
And at what prices would they buy and hold them?
Real and nominal Treasury rates are both substantially lower than they were 21 months ago. By all market indicators, the U.S. is still further from reaching the limits of its debt capacity now than it was then: