Right. That explains the infinite, insatiable lust for our Treasury bills, notes, and bonds.
Until I see the world protest US actions in the only way that matters( e.g. refusing to finance our government's activities ), I will continue to laugh off the "world hates the US" babble.
Stop buying our toilet paper and I'll take it seriously.
Drive down to the poorest section of your town. Do you see any pawn shops? Do you see any signs offering to buy dilapidated houses for cash? Do you see cash for gold signs? Do you see payday loan businesses? Do you see businesses that advance you money against your tax refund? Will someone give you a sub-prime loan to buy a house you can't afford? Is there a WalMart ready to sell you plastic junk?
I am not saying that the US is an economic slum. However, I offer this analogy to demonstrate that it is a logical fallacy to assume that just because people want to sell you stuff and loan you money, therefore your actions must be respected.
The world doesn't boycott doing business with you. So what? That doesn't automatically mean that it respects what you are doing, any more than a pawnshop owner loaning money in the slum respects his clientele.
p.s. Please don't take my response too personally, I'm reacting to the previous 999 times I've read it or variations of it as well.
p.p.s. FWIW, If I were to argue that the world still looks up to the US, I wouldn't use treasury bonds to bolster my argument, I'd use immigration. It's hard to argue with the hordes of people who pack up their lives and cross oceans to start fresh in the USA.
As long as auctions maintain a BTC ratio over 1.0 with short tails, the appetite is effectively insatiable, especially at the enormous rate of issuance over the last few years.
"For the duration of QE2, the Fed has been buying 70% of all new Treasury-bond issuance, and foreigners have been buying the other 30%. When the Fed stops buying, who will step in to replace it? After all, with a $1.5 trillion budget deficit, there’s a lot of new supply coming." -- Felix Salmon, Reuters
When the world stops buying your toilet paper, as you so eloquently put, you won't have the opportunity to take it seriously. Your economy is predicated on people buying your toilet paper so your government overproduces it. If it all comes back to you, you'll be lucky if the US is doing any better than Zimbabwe a few years later.
Until I see the world protest US actions in the only way that matters( e.g. refusing to finance our government's activities ), I will continue to laugh off the "world hates the US" babble.
Stop buying our toilet paper and I'll take it seriously.