Re:Warren Buffett compares US Fed to a hedge fund
by brazzy on Saturday September 21, 2013 @06:03PM
(#6424777)
> the fact foreigners are exiting treasuries
Can you back up that claim?
Re:Warren Buffett compares US Fed to a hedge fund
by wintersFright on Saturday September 21, 2013 @08:59PM
(#6425304)
Actually, foreign Central Banks don't even need to dump treasuries to require QE Infinity - they can just reduce or stop absorbing the continual outflow of debt emitted by the USG.
The USG has a trillion dollar+ yearly budget deficit. If central banks don't absorb that outflow of debt then either the USG reduces its spend (as if, those NSA datacentres aren't cheap), interest rates go up (USG will need will need even more debt to pay its debt) or the fed continues to buy it all up.
QE infinity is all about hiding the fact foreigners are exiting treasuries so the fed is the last resort buyer of USG debt. Without the fed backstopping, interest rates paid by the USG on its debt would have to go up which would very quickly crash the system.
Warren is just doing his patriotic duty to kick the can a little further down the road.