I want to go over the following again. The US is now actually borrowing to pay off the interest on its huge and growing debt.
The Treasury continually issues bonds. But who will buy them? Can you believe it? The US is reduced to actually buying its own debt via the Federal Reserve. What does the Fed buy our debt with? It buys our own debt with money that it conjures up out of thin air by means of a bookkeeping entry. The Fed has been doing this for years and the Fed's basket of bonds is now over $4 trillion dollars worth of assorted bonds.
The continuing buying of bonds (QE), now $65 billion every month, has driven stocks up to overvalued levels. Companies are taking advantage of the lower rate environment in the limited period that these low rates are going to be around.
Now the Fed is trimming back its QE ... Log in or subscribe to continue reading.
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