> >>
>Wall Street loves underwriting, trading, and repackaging Treasury
>paper. There was a little chat on CNBC earlier today about how the
>government is issuing more bonds than needed in its quarterly
>refunding in order to buy back old debt and provide new debt; traders
>like newer debt trading closer to 100 (i.e., not far away from 100,
>as market rates diverge from the coupon rates) with maturities close
>to round numbers.
> >>
>
>mbs: For sure, but doesn't this market contract radically,
>to say the least, if Federal debt is eliminated? Don't
>they care about that?
Not yet, as far as I can tell. In the short to medium term, reducing the number of bonds outstanding is bullish. In the long term, we're all dead. Either that, or no one thinks that far ahead, or no one believes the projections. But this long-term surplus scenario hasn't entered market consciousness.
>Going back to Nathan's claim, if public debt is a vehicle
>for draining wealth from taxpayers (right now about $220b
>annually -- not much compared to GDP, but a lot compared
>to income of the rich), why roll back the volume of
>public debt?
Sound finance. Boosts national savings. You know the rap. Even liberal Democrats sing this song now.
Doug