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  • U.S. Estimates Borrowing of $1.4 Trillion in Second Half of 2021

    From bnnbloomberg.ca

    The U.S. Treasury Department said the government will borrow almost $1.4 trillion in the second half assuming lawmakers raise or suspend the newly reinstated debt limit, as money continues to support coronavirus relief even before the impact of additional economic programs being considered by Congress. The department expects to issue $673 billion in net marketable debt from July through September, $148 billion less than it estimated in May, according to a statement released Monday in Washington. The Treasury sees an end-of-September cash balance of $750 billion, unchanged from from its forecast three months ago. The ... (full story)

Stop using the term BORROWING!!!! What the US Treasury Department is really doing is PRINTING!!!!
Use the right term for the event........................................................????
Quoting jjreynolds
Stop using the term BORROWING!!!! What the US Treasury Department is really doing is PRINTING!!!! Use the right term for the event........................................................????
Hi. Printing money and borrowing money are two completely different things. I hope I did not misunderstand you. If that’s the case, then I apologize.
However printing and borrowing money are different approaches to pay debts and when they say borrowing then they mean probably borrowing.

https://money.stackexchange.com/ques...of-printing-it

https://economics.stackexchange.com/...printing-money
Start with 1000$. Increase by 3% every day. After one year 2 213 314$
Quoting NotAtrader
{quote} Hi. Printing money and borrowing money are two completely different things. I hope I did not misunderstand you. If that’s the case, then I apologize. However printing and borrowing money are different approaches to pay debts and when they say borrowing then they mean probably borrowing. https://money.stackexchange.com/ques...of-printing-it https://economics.stackexchange.com/...printing-money
Maybe they print the t-notes. Dunno.
Is “borrowing “from yourself really borrowing?
JJ has a point , think about it.
To Put it another way , if you tried to claim the cost of “borrowing “ from yourself , you will have an interesting ride with the ATO.
In this example the Fed is both the “borrower “ And , the Treasury , and the Taxing body, even worse .
A good laugh really .
Old Dog Kiwi
Quoting aquavox
Is “borrowing “from yourself really borrowing? JJ has a point , think about it. To Put it another way , if you tried to claim the cost of “borrowing “ from yourself , you will have an interesting ride with the ATO. In this example the Fed is both the “borrower “ And , the Treasury , and the Taxing body, even worse . A good laugh really .
No, the government is borrowing. Treasury is the department which administers it by going out into the market, usually at regular intervals, and sells T-Notes.

Money is taken out of the economy with one hand and put back in with the other. A transfer. A re-distribution.

JJ has no point.
When the US is utterly broke, you can not borrow from yourself if you have no money/wealth! So all the US has left, is to fob off the ignorant public and print pretend money!
For over 10 years, there have been nice educational videos floating out there that explain how QE works, I recommend looking them up.

In a nutshell:

* Treasury issues new debt, partly to pay for maturing debt, and partly to finance the government going forward, i.e. debt financing.
* In doing so, deficit increases and national debt rises. Congress has to raise the debt ceiling to avoid default, for the 1000th time.
* The Fed is a primary buyer of the newly issued debt, and in doing so they inject new (previously non-existent) liquidity into the system, aka printing money.
* Because there's a huge buyer of the new debt, the interest rates on the debt remain unnaturally low, and bond/stock/housing prices stay artificially high.

Now imagine what would happen if the big buyer suddenly stopped buying.
What's not QE?

QE is ALL about buying Treasury, MBS and even corporate debt. The Fed does not call it printing money because it's a slightly more opaque and dignified term, to those who like splitting hairs. But buying debt is just the instrument to reach the same goal. In practice, there's no discernible difference because the end result is still the same - more money sloshing around the economy than before. Ever before. It's not taking money out and putting it back in. It's borrowing money from the money press and putting it back in.

All money is debt. The Fed is the ultimate backstop buyer/lender, and without it, no "recovery" would ever be possible. Nor would the government be able to borrow, at rates anywhere near where they are now. How is printing money not enabling record borrowing then?

Risk on, to the moon - in Fed we trust.
Quoting Subdude
For over 10 years, there have been nice educational videos floating out there that explain how QE works, I recommend looking them up. In a nutshell: * Treasury issues new debt, partly to pay for maturing debt, and partly to finance the government going forward, i.e. debt financing. * In doing so, deficit increases and national debt rises. Congress has to raise the debt ceiling to avoid default, for the 1000th time. * The Fed is a primary buyer of the newly issued debt, and in doing so they inject new (previously non-existent) liquidity into the...
Who is asking about QE? Wrong thread. QE is monetary policy.

This is the fiscal sandpit. Do Americans even know the difference?
Quoting Subdude
What's not QE? QE is ALL about buying Treasury, MBS and even corporate debt. .
Yes, on the open market operations from major financial firms, the primary dealers. How is this relevant to the subject of this thread?

" The Fed is a primary buyer of the newly issued debt" That statement is just so wrong. Wow.

Its illegal for the Fed to do that. Do I have to remind Americans about the Federal Reserve Act?

Treasury operations and Fed operations must be quite independent. Stop confusing the good people on this forum.
Quoting LloydOz
{quote} Yes, on the open market operations from major financial firms, the primary dealers. How is this relevant to the subject of this thread? " The Fed is a primary buyer of the newly issued debt" That statement is just so wrong. Wow. Its illegal for the Fed to do that. Do I have to remind Americans about the Federal Reserve Act? Treasury operations and Fed operations must be quite independent. Stop confusing the good people on this forum.
Since you're an Aussie, I'll cut you a break for ignorance. However, you should educate yourself before posting gibberish.

The Fed DOES buy U.S. Government debt, they have been doing this for over a decade. Do I need to find proof for you? https://www.crfb.org/blogs/fed-buying-our-new-debt

Now, they don't buy it directly from the Treasury - but who cares??? Both regular and shadow banking systems here are set up to transfer private responsibility to the public, and that's exactly what takes place.

Attached Image (click to enlarge)
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Quoting NotAtrader
{quote} Hi. Printing money and borrowing money are two completely different things. I hope I did not misunderstand you. If that’s the case, then I apologize. However printing and borrowing money are different approaches to pay debts and when they say borrowing then they mean probably borrowing. https://money.stackexchange.com/ques...of-printing-it https://economics.stackexchange.com/...printing-money
LMAO @ all you sticklers trying to correct basically accurate categorizations of what's going on.

Step 1. U.S. Government wants to borrow more money
Step 2. It issues new bonds
Step 3. "Primary dealers" buy the new bonds (they only do it because they can turn around and sell it downstream - see Step 4)
Step 4. The Fed buys the new issuance from the primary dealers (e.g. GS)

Question: where did the Fed get the money to buy the newly issued bonds?

From the second link you posted:

Quote
Moreover, most of the money nowadays is not printed but it is created electronically by Fed - there is no meaningful economic difference between printing a note and creating an equivalent electronically but still its good to make that distinction to know where the money is coming from (i.e. not really from Bureau of Engraving and Printing but mostly from Fed).

Hairs split:
Quoting Subdude
{quote} LMAO @ all you sticklers trying to correct basically accurate categorizations of what's going on……….. ……….
The point here was that there’s a difference between borrowed money and printed money and the difference of consequences as a result of the two approaches which is btw very simple and well explained in the links that I posted:

“So government debt doesn't create inflation in itself. If they printed money, then they'd be devaluing the money of everyone who had saved or invested, whereas if they borrow money and use taxes to repay it, the burden falls more evenly across the economy and doesn't disproportionately penalise certain sets of people.”

The discussion is simple and I referred to facts to point out that there is a difference between printing and borrowing money. Your point is unclear to me unless you just need to argue with someone.
Start with 1000$. Increase by 3% every day. After one year 2 213 314$
Unless you are 6 years old or have no clue about how basic economics and credit work, you should be able to see past the spin, and realize that borrowed money leads to printed money - and certainly not proliferate the spin. It's completely obvious if you read the data driven article I posted that details that basically all of the new US govt debt issued since the start of the pandemic ended up on the Fed's books.

You see, when you borrow money, someone has to loan it to you. Sometimes that someone doesn't want to hold on to the debt and they sell it down the river, e.g. most mortgages in U.S. are ultimately sold to and held by GSEs (bailouts, anyone?), and not the originators or even big banks. In case of Treasurys, the buck stops (and funnily starts) with the Fed - there's nobody else to resell the debt to.

How is the Fed able to purchase all that debt? Where do you think it gets the money from? Is it material that suitcases full of notes aren't delivered to the next debt seller (bank), and instead their accounts are credited with extra billions, electronically?

P.S. Oh, and gotta love that one - "use taxes to repay it". In what year - 2300?
Quoting NotAtrader
{quote}Your point is unclear to me unless you just need to argue with someone.
Cats are better pets than dogs.
Quoting Subdude
Unless you are 6 years old or have no clue about how basic economics and credit work, you should be able to see past the spin, and realize that borrowed money leads to printed money - and certainly not proliferate the spin. It's completely obvious if you read the data driven article I posted that details that basically all of the new US govt debt issued since the start of the pandemic ended up on the Fed's books. You see, when you borrow money, someone has to loan it to you. Sometimes that someone doesn't want to hold on to the debt and they sell...
Hey why can’t you just send you objections to the guys who wrote the explanations about the difference between printed and borrowed money. Despite that your comment is slightly off topic they might get your point. It’s pointless to argue with us as we only refer to facts while you provide none.
Just contact these people and tell them that they have no clue about how basic economics and credits work. You have their contact information in the links above. Maybe they can learn something from you.
Start with 1000$. Increase by 3% every day. After one year 2 213 314$
Quoting NotAtrader
{quote} Hey why can’t you just send you objections to the guys who wrote the explanations about the difference between printed and borrowed money. Despite that your comment is slightly off topic they might get your point. It’s pointless to argue with us as we only refer to facts while you provide none. Just contact these people and tell them that they have no clue about how basic economics and credits work. You have their contact information in the links above. Maybe they can learn something from you.
My comments were not off topic at all. While the initial poster was not technically correct in identifying the party instrumental in debt monetization, the end result is certainly more liquidity in circulation, aka more inflation, aka printing money. There's no hidden agenda here - the Fed has and is admitting as much, spin notwithstanding.

I did provide facts, and numbers - all you have to do is want to read and understand. The article I quoted is some 15 months old but it clearly explains that by then the Fed had bought $1.5T of Treasury bonds, in a space of 3 months - which basically happened to be almost all of the debt issued in that time frame. It's not hard to find out what it has done since, either (hint: see that search bar in your we browser?).

The reason why this discussion is pertinent to FF is because it is directly related to the amount of USD flowing into the world financial system.

I do not need to contact anyone as I'm not looking to engage in any more aggravating discussions with people who deliberately suspend attention span and critical thinking, only to continue pointless flame wars.
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  • Posted: Aug 3, 2021 3:28am
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     Newsstand
    Category: Fundamental Analysis
    Comments: 17  /  Views: 1,883