Federal Reserve Buying 61 Percent Of U.S. Debt and Euro Debt


Federal Reserve Buying 61 Percent Of U.S. Debt and Euro Debt

Repost: Posted By: Susoni

This is the worst economic news I’ve read in over a year. The privately held Federal
Reserve is printing worthless Federal Reserve Notes as fast as they can
(or as fast as they can create worthless fed notes with computer key
strokes) to secretly buy up hundreds of billions in European debt, and
now is buying most of our nation’s debt! China, Japan, Singapore, and
other lender nations are afraid to loan us any more money. Don’t hold
your breath waiting for the Main Stream Media to tell you this horrible
news!…
Susoni

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The Federal Reserve is propping up the entire U.S. economy by buying 61
percent of the government debt issued by the Treasury Department, a
trend that cannot last, Lawrence Goodman, a former Treasury official and
current president of the Center for Financial Stability, writes in a
Wall Street Journal opinion article published Wednesday.

“Last year the Fed purchased a stunning 61 percent of the total net
Treasury issuance, up from negligible amounts prior to the 2008
financial crisis,” Goodman writes.
Goodman also warns that U.S. economy and markets are “at risk for a sharp correction” if conditions aren’t “normalized.”

“This not only creates the false appearance of limitless demand for U.S.
debt but also blunts any sense of urgency to reduce supersized budget
deficits.”

The U.S. government is growing increasingly more dependent on borrowing
to finance itself, with net issuance of Treasury securities hitting 8.6
percent of gross domestic product (GDP) on average per annum, more than
double levels before the crisis.

Fed intervention in the government debt market makes demand for Treasury
bonds appear higher than it really is, as foreign creditors and other
investors have fled U.S. government debt instruments and are looking
elsewhere until the government makes serious attempts to curb spending
and narrow its gaping deficits.

Goodman notes that foreign investors like Japan and China that once
scooped up U.S. debt are shunning it. In 2009, such foreign purchases of
U.S. debt amounted to 6 percent of GDP and has since falled by over
eighty percent to a paltry 0.9 percent.

Without foreign buyers and a shrinking base of U.S. corporate and bank
buyers, the Treasury has had to resort to the Federal Reserve itself to
make the purchases. The Fed purchasing not only makes up the shortfall,
but can keep long term interest rates artificially low….

Read Full Article Here: http://nesaranews.blogspot.com/2012/03/federal-reserve-buying-61-percent-of-us.html

 

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