Feels like Wile E. Coyote who has sped off the cliff but will keep going until he inevitably looks downward.
Indeed
Over $9T of Federal Debt Will Mature in the Next Four Years
11–20 of 57 posts
Re: Over $9T of Federal Debt Will Mature in the Next Four Years
#12Can someone ELI5 what this means?
The US Government spends more money than it takes in taxes. In order to finance the difference it takes out loans (in many ways just like you might take out a loan to buy something). These loans take the form of government bonds. Various people/organizations buy these bonds and give the US government money. Later on these bonds "mature" and those people get their money back plus some interest. This post is saying tha…
One buyer, in particular, most likely will stop buying and that is China.
Re: Over $9T of Federal Debt Will Mature in the Next Four Years
#13Can someone ELI5 what this means?
The US Government spends more money than it takes in taxes. In order to finance the difference it takes out loans (in many ways just like you might take out a loan to buy something). These loans take the form of government bonds. Various people/organizations buy these bonds and give the US government money. Later on these bonds "mature" and those people get their money back plus some interest. This post is saying tha…
[deleted]
Re: Over $9T of Federal Debt Will Mature in the Next Four Years
#14Can someone ELI5 what this means?
That's extremely difficult to explain for many, many reasons.
Ignoring a great deal, basically that debt either needs to be paid off when it matures or rolled over into bonds e.g. issuing debt to receive cash that can be used in paying off those bonds.
Now, how that will affect the USD is where things get complicated. Will a higher interest rate be needed on new financing to attract investors? Will the Treasury have cash on hand to cover paying off all of those?
Assume they goto the market to refinance all of those bonds and have to pay a higher interest rate: this means tax payers have to pay more taxes, and get less services because more of their money is going to interest payments on this debt. Or perhaps they can only find investors willing to buy 8 trillion in new bonds, then that means the budget needs to cut out 1 trillion for that year in services, just to give a couple ways how this could play out.
Everyone has their own idea of what will happen and will speculate accordingly. Some might think interest rates will explode, of the Fed might cut. Maybe Foreign flows will not be reinvested and affect the USD accordingly. Etc, etc, etc...
Re: Over $9T of Federal Debt Will Mature in the Next Four Years
#15Looking at this number in a vacuum and not in light of total spending/borrowing, and looking at it in a linear scale, makes this not as interesting. To be clear, this is a huge number and generally government debt is the problem. But this is a record amount of debt only because EVERY YEAR is a record amount of debt.
The article says that this "represent[s] the fastest growth in the amount of maturing debt since the Financial Crisis", but that's not true. Looking at the numbers, this represents a 10.0% increase from the previous year but 2012 gave us 10.7%. 2008, 2009, and 2010 represent bigger jumps, but you can argue that the financial crisis extended to 2010 (although you can argue that it's still not really over now -- definitions are hard). Pre-crisis we had 2003 13.5%, 2002 12.5%.
Re: Over $9T of Federal Debt Will Mature in the Next Four Years
#16Earlier quoted context omitted.
The US Government spends more money than it takes in taxes. In order to finance the difference it takes out loans (in many ways just like you might take out a loan to buy something). These loans take the form of government bonds. Various people/organizations buy these bonds and give the US government money. Later on these bonds "mature" and those people get their money back plus some interest. This post is saying tha…
One buyer, in particular, most likely will stop buying and that is China.
Have they made that threat?
Re: Over $9T of Federal Debt Will Mature in the Next Four Years
#17Can someone ELI5 what this means?
The US Government spends more money than it takes in taxes. In order to finance the difference it takes out loans (in many ways just like you might take out a loan to buy something). These loans take the form of government bonds. Various people/organizations buy these bonds and give the US government money. Later on these bonds "mature" and those people get their money back plus some interest. This post is saying tha…
>In some ways this is actually great for the government because interest rates are at very low levels right now...
Just what I came here to mention. The debt that matures will almost certainly have had a higher interest rate than whatever the amalgamated rollover rate will be.
Re: Over $9T of Federal Debt Will Mature in the Next Four Years
#18Earlier quoted context omitted.
The US Government spends more money than it takes in taxes. In order to finance the difference it takes out loans (in many ways just like you might take out a loan to buy something). These loans take the form of government bonds. Various people/organizations buy these bonds and give the US government money. Later on these bonds "mature" and those people get their money back plus some interest. This post is saying tha…
One buyer, in particular, most likely will stop buying and that is China.
China has fluctuated between being a net buyer and net seller recently (https://ticdata.treasury.gov/Publish/mfh.txt)
Re: Over $9T of Federal Debt Will Mature in the Next Four Years
#19Re: Over $9T of Federal Debt Will Mature in the Next Four Years
#20Earlier quoted context omitted.
The US Government spends more money than it takes in taxes. In order to finance the difference it takes out loans (in many ways just like you might take out a loan to buy something). These loans take the form of government bonds. Various people/organizations buy these bonds and give the US government money. Later on these bonds "mature" and those people get their money back plus some interest. This post is saying tha…
One buyer, in particular, most likely will stop buying and that is China.
Maybe, but China only holds about USD1T in US bonds. With the majority of that not maturing in the next four years.