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Forum Post: Run, Forest, run!

Posted 2 years ago on Oct. 9, 2012, 2:56 p.m. EST by udacious (12) from Plattsburgh, NY
This content is user submitted and not an official statement

Investors will fear default and quit buying our bonds if American debt gets too large. Why are we borrowing excess wealth that investors have no productive use for and paying them interest, instead of taxing them for it and avoiding debt?

If they're lending it to US they're not creating jobs with that which we don't tax. The only way it creates jobs is if the government uses it to grow and put people to work in the process.

Are the cons crazy or just plain stupid? Run, Forest, run!

12 Comments

12 Comments


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[-] 2 points by bensdad (8977) 2 years ago

simple answer - grover norquist

[-] 1 points by hchc (3297) from Tampa, FL 2 years ago

The only people buying the bonds are forced to through retirement and pensions. The US bought over half of its own debt in 2011.

Pretty much every politician is useless these days, because I dont really see anyone making any real noise.

[-] 2 points by udacious (12) from Plattsburgh, NY 2 years ago

From the NY FED:

"Foreign official accounts, in particular, held $1.3 trillion of Treasury securities at the end of 2005, or about 30 percent of all marketable Treasury securities outstanding." . . .

"The investor class data show that dealers and brokers alone account for 75.4 percent of Treasury securities sold to the public, on average (Table 3). Foreign and international investors account for the next largest share, 12.5 percent, followed by investment funds (6.5 percent), depository institutions (0.5 percent), individuals (0.5 percent), and private pension and retirement funds and insurance companies (0.0 percent). “Other” investors, not captured in any of the classes cited, accounted for 4.6 percent of the Treasury securities sold to the public.10 Again, there is significant variation in purchase shares across auctions, with depository institutions buying as much as 31.6 percent of an issue, investment funds buying 46.1 percent of an issue, and foreign and international investors buying 38.6 percent of an issue." . . .
http://newyorkfed.org/research/current_issues/ci13-1/ci13-1.html

[-] 0 points by hchc (3297) from Tampa, FL 2 years ago

No one in their right mind would want that garbage

http://www.moneynews.com/Headline/fed-debt-Treasury/2012/03/28/id/434106

[-] 0 points by hchc (3297) from Tampa, FL 2 years ago

Those dealers and brokers are really just the Fed buying its own garbage.

[-] 1 points by udacious (12) from Plattsburgh, NY 2 years ago

Those are Treasury bonds the dealers buy. The FED, a non profit private bank, creates money electronically that it loans to member banks at cost. Those banks loan it to us, and possibly to dealers, at a profit. But the Treasury bonds are related, if at all, only indirectly to the FED.

[-] 1 points by hchc (3297) from Tampa, FL 2 years ago

"The primary dealers are the same institutions that are eligible to buy from the Department of Treasury (United States) during monthly bond auctions: banks like Goldman, Morgan Stanley, JPMorgan Chase, Citigroup Inc., etc.

Here's how the process works: • A few days in advance of the auction, the U.S. Federal Reserve provides a list of the specific bonds and amounts they'd like to buy • At a specific time, all the primary dealers submit their best offers to the Fed, i.e. they submit the lowest price at which they'd be willing to sell. • The Fed buys from those dealers who offer the lowest price.

They buy via auction rather than buying from the Treasury since it increases transparency and helps them get a better price."

[-] 1 points by udacious (12) from Plattsburgh, NY 2 years ago

The source cited produced these numbers:

“Our analysis excludes amounts sold to the Federal Reserve.Amounts awarded to the Fed are made in addition to the public offering amount. Based on total issue sizes, the Fed bought an average of 19.1 percent of all 904 Treasury securities auctioned between July 30, 2001, and December 28, 2005.”

http://newyorkfed.org/research/current_issues/ci13-1.pdf

I couldn't verify your assertion that “The primary dealers are the same institutions that are eligible to buy from the Department of Treasury (United States) during monthly bond auctions: banks like Goldman, Morgan Stanley, JPMorgan Chase, Citigroup Inc., etc.”

Can you specify your source?

And how did you come to the conclusion that the FED is buying from those dealers?

[-] 0 points by hchc (3297) from Tampa, FL 2 years ago

I cam to the conclusion because its kind of common knowledge, the big six, and I dont think they really buy from anyone besides Goldman anyways.

Keep in mind that analysis was from 2005, we are in full blown print mode, keep-the-economy-up-for-as-long-as-possible mode right now.

[-] 1 points by udacious (12) from Plattsburgh, NY 2 years ago

I see.

[-] 1 points by Buttercup (1067) 2 years ago

Because 50% of the electorate, give or take, that vote for the economic interests of the 1%, by supporting Republicans, for some stupid ass reason or another - don't accept facts or logic, if it gets in the way of their 'beliefs'.

They still embrace trickle down theory as if it is religion. Even though all macro economic data, and even their own economic circumstance, says otherwise.

Trickle down theory says their economic circumstance will improve. They can't see it or feel it, but yet, they have faith that it's real somehow. Overactive imaginations combined with high levels of ignorance, stupidity and generalized sociopathy brought on by FoxNews, Rush Limbaugh, et al. Beats me. I don't know what the fuck is wrong with these people.

[-] 1 points by agkaiser (1329) from Fredericksburg, TX 2 years ago

stupid and crazy