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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

GLD 387.98

+1.3%

Nov 28 4:00 PM EST

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To: posthumousone who wrote (68122)	11/13/2010 3:45:28 PM
From: prosperous	Read Replies (2) of 218108

Yes the FED can keep treasury buying game for a while until an external event makes that effort even more futile (not that its not futile now) and some large holders of treasuries starting to sell those would start undermining confidence in the US debt, FED, and $ starting a cascade (force higher yields on these instruments and making liabilities appear unsustainable). If China and Japan were to sell their share of 1.5T in US treasuries does FED have the ability to absorb it without causing severe disruption (keeping yield low as it is and the dollar at a reasonable level) as they have been able to get away so far? My suspicion is that the FED buying of US treasuries may be able to compensate for lack of new buying by foreign soverigns to some extent, but they will be be able to absorb both foreign selling in addition to lack for foreign buying of USTs needed to service the total and growing debt. That would spark an event horizon.

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