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The eurozone's crisis has shifted focus away from the U.S.'s enormous debt load and has lifted...

The eurozone's crisis has shifted focus away from the U.S.'s enormous debt load and has lifted foreign demand for Treasurys. Once global factors cede the spotlight, and eventually they will, and as the Fed starts to remove itself as a buyer, Treasurys may be poised for some pain.
Comments (22)
  • I'll believe it when I see it...have heard this for the last 4 years. Fed will no doubt come up with something new to hold rates artificially low.
    20 Feb 2012, 12:14 PM Reply Like
  • Does this imply that all Ponzi schemes must eventually come to a halt?


    Will QE3, and then 4, and then 5, and etc, delay it?
    20 Feb 2012, 12:17 PM Reply Like
  • You think the debt load is "enormous" today, just wait for 5 years when it will be 30 - 40% higher. I guess then it will be "gigandonormous". And let's see say we have an incremental increase in interest rates of 2% on an additional $6 trillion in debt, then we'll have higher interest expense on debt of $120 billion, which will be the equivalent of nearly 3/4 of 1% of GDP - just the incremental interest on the incremental debt. Total debt at $21 Trillion will yield $420 billion in incremental interest or fully 2.6% of GDP and roughly 16 or 17% of REVENUES. Sounds sustainable to me.
    20 Feb 2012, 12:25 PM Reply Like
  • Gargantuan.
    20 Feb 2012, 05:26 PM Reply Like
  • What about the so-called 'Sequestration'? All forgotten about? Another $1.2T in FY2013? We've had $1.2T for each of the 4 consecutive years of this incumbent president.
    20 Feb 2012, 12:27 PM Reply Like
  • US debt load can literally go up forever. Even at 100% of GDP, that's only half of what Japan carries, and they pay even LOWER interest rates than we do. As long as there is no inflation (which therer won't be unless we have job growth.. something we haven't had in decades), they can literally borrow ANY amount they want, and print money to pay it back. It is literally a free lunch.
    20 Feb 2012, 01:24 PM Reply Like
  • You are joking, I hope.
    20 Feb 2012, 01:29 PM Reply Like
  • Never mind.


    I guess 300 million citizenry like it borrowing more and more (and more). It is only me harping like a broken record or radio.


    Same thing with illegal immigration. I finally figured it out.


    The American people actually like it too. Cheap labor, low inflation, lots of workers showing up at the snap of a finger.


    The lawmakers like it, keeping the CPI low, which also helps the GDP number. I throw in the tower now. I can't live other people's lives. Good luck though! Eventually it will implode!


    Who cares, let's make money first. lol.
    20 Feb 2012, 01:42 PM Reply Like
  • Not at all. Show me where I'm wrong. Are my figures incorrect? Is it not true that Japan has 200% debt to GDP, compared to 100% debt to GDP in the US, and Japan's economy is weaker than the US economy? Finally, is it inaccurate to say that Japan pays the lowest interest rates of anyone in the world? If all of those are true, how would you explain it? Clearly a nation can carry a MUCH higher debt to GDP than the US does, and can do it for long periods of time (decades or more), AS long as they are willing to print money (as Japan has) to support the economy.
    20 Feb 2012, 01:58 PM Reply Like
  • And when interest rates rise? What then? It is unrealistic to think we will have zero interest forever. Then when they do, interest takes a ever greater % of total spending just when entitlements zoom up. Then the fed prints us into higher inflation. Great.
    20 Feb 2012, 02:37 PM Reply Like
  • 'tower' be 'towel', typo. Sorry.
    20 Feb 2012, 04:41 PM Reply Like
  • Hey....if you can pick up the tower to throw it in, then good on you. I'm too old.
    20 Feb 2012, 07:11 PM Reply Like
  • Where you are wrong is in the high % of Japanese debt is internally funded and the US is mostly externally funded.
    Sure, we have the reserve currency status and the great potential of legal immigration. A proper executive branch might chart a course involving making us a natural resource net exporter of significance to help with the trade deficit. Congress might restrain govt spending to 1% a year and perhaps have other pro growth initiatives, etc. It's scary how we could be ending 2012 with this third world plan of goosing the economy in an election year, then pulling back the reins after re-election. Straight out of the Mexican playbook.
    If you d have told me we d increase the US debt 41% in the first three years BEFORE the real demographics kick in....Medicare and social security, I'd have never believed it.
    21 Feb 2012, 01:15 AM Reply Like
  • Unfortunately, there is no such thing as "pulling back the reins". There is not a single person in DC with the horsepower to really CUT the budget. They are an utter disgrace.


    The don't even have the termerity to fix spending at current rates.
    21 Feb 2012, 09:00 AM Reply Like
  • I think that the problem here is that many of you still act (and think) as if we are on a hard money system, like the gold standard. We are not. We are on a fiat monetary system, which provides the gov't the ability to print and spend, LITERALLY, an infinite amount of money, so long as the dollar is accepted by everyone as a legitimate currency, as it is now. In fact, you can buy anything, almost anywhere in the world with US dollars. They're more accepted than gold. And that isn't going to change, until/unless the US is no longer the dominant global military power. We control the sea, period. You control the sea, you control trade.. you can do what you want with your currency. You folks need to study up on Modern Monetary Theory.. I'd recommend googling some articles by Warren Mosler, or Cullen Roche. Good luck!
    20 Feb 2012, 02:04 PM Reply Like
  • Bman409,


    You may be right, I forgot it is a 'Dog-Eat-Dog' scenario, depending on which dog is bigger and more ferocious. So, "Go Ahead, Make My Day!" (After Clint).


    20 Feb 2012, 02:43 PM Reply Like
  • always has been.


    Can you live beyond your means forever?? Probably not.. but as the Romans proved, you can do it for at least 1000 years, if you're big and bad enough
    20 Feb 2012, 04:06 PM Reply Like
  • Bman409




    The infamous Roman Emperor Caligula, if I remember correctly, even bestowed Roman citizenship to all conquered domains, and might have including slaves too.


    Reason? As historians conjectured, 'to increase taxes'. Sounds familiar, recalling our so-called many 'Amnesties'. Of late, the popular prime time 'Good Housewife' TV Series even featured an illegal young lady.


    Wow, illegal immigration is making it all the way to the main stream!
    20 Feb 2012, 04:38 PM Reply Like
  • This is exactly the argument Ponzi planned on. It'll blow up sometime, but it's just a bet that it won't happen in your lifetime. Great philosophy.


    Further, we won't be the dominant military power much longer, as we are ceding sea control to China. We've virtually cut out sub force to nothing; our naval weapons systems are aging; and we simply don't have the fortitude for confrontation anyway. China sent a fleet around the world about 6 years ago-- it barely made news. But another nascent world power did the same thing over 100 years ago. Significant?
    20 Feb 2012, 04:50 PM Reply Like
  • "And that isn't going to change"...and that is where you are is changing now..look who is buying all the gold....they can see the future too...and is Obama building up our armed forces ...or cutting them...they see that is print print print...the politicians that is all they can do...but at some point it will be hyperinflation..then a new world currency will show up....


    No are crazy..we will have $5 gas by costs will skyrocket...sure an Ipod will drop in cost...but if you eat or will have 10% inflation..oh well I will never change anyones mind at this point in the are either left or gold...
    20 Feb 2012, 02:25 PM Reply Like
  • It won't change as long as the Fed and our Presidents use the military to take down any oil producing nations that try and bypass the dollar.


    In other words, unless Ron Paul is elected, expect more wars to maintain the status quo.
    20 Feb 2012, 03:51 PM Reply Like
  • exactly.


    btw, I don't like the current system. I hate the Fed and I support Ron Paul


    that said, as long as we are under the Federal Reserve system, I would suggest learning how it operates. I used to be one of those guys that thought the Austrian monetary school was correct.. .that more borrowing lead to higher interest, etc.. but the facts were not supported by the theory... then I figured it out. That only applies if you have a FINITE money supply. Supply and demand doesn't work when supply is infinite
    20 Feb 2012, 04:08 PM Reply Like
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