LA

Who's Piloting U.S. Treasury Bonds' Flight to Safety?

Brian, after reading your article, I'm left with the same question you asked at the beginning: why would anyone - particularly foreigners - buy debt for a 0% return? Particularly when we consider that dollar-denominated assets are losing value because of the currency depreciation. What sense would it make to buy short-term paper from a government with exploding deficit, denominated in a falling currency, and with a 0% yield to maturity?
But the most worrisome point however is this: the US debt is not $11 or $11 trillions. That's the on-balance sheet portion. Over the last few years the government has started to keep new debt off balance sheet, resulting in a real deficit closer to $55 trillion. At least according to David Walker, former U.S. Comptroller General. In the long run, who is going to finance that in exchange for a 2% or 3% return?