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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: KLP who wrote (437071)	7/25/2011 7:10:22 AM
From: skinowski	4 Recommendations Respond to of 793846

""Reducing the budget deficit won't help much - not when the Treasury can borrow 10-year money at only 3%,"" I think this is where he is nailing down the problem. If half of the shares bought on the stock market would be purchased by the Government, the public would get scared. That's what is happening with the bond market. The big buyer is the Fed, and in order to buy our Gov debt the Fed simply creates the funds. We have artificially low rates and a bubble in bond prices. Prudent businesses feel insecure and are still reluctant to borrow -- the big borrower is the government. Without the Fed continuing to create enough money to keep up the price of T bonds, the whole thing would probably collapse. It really is quite disturbing.