What happens if no one buys our debt and the federal reserve says "no more asset purchases"

[EinsteinsGhost]

Originally Posted by newonecoming2

$221,100,000,000.00 A drop in the bucket.

Well, there is the problem. Not even worth paying the annual interest on existing debt for one year.

[pghquest]

Originally Posted by JazzyTallGuy

Neither is likely to happen because quite frankly to many countries around the world have a vested interested in keeping the American economy from collapsing.

True.. but by continuing to float our debt, they are encouraging the devaluing of the dollar, which is actually encouraging a collapse..

Originally Posted by JazzyTallGuy

The United States imports 1.9 TRILLION dollars a year. For many countries around the world the United States is there largest trading partner.

Yes but if our dollar inflates, this simply means it would take more dollars to buy their products. The sale would still take place, just at an inflated price..

Originally Posted by JazzyTallGuy

Also the FED has a vested interest BY MANDATE to insure the economic stability of the United States.

True but the only way the FED could help is
1) by printing currency and buying it back, which would increase the interest payments yearly on the national debt while not really solving anything.
2) Printing currency and not buying it back which creates inflation.

Originally Posted by JazzyTallGuy

It's nice to think of these doomsday scenarios but things are going to have to get a hell of lot worse than they are now for anybody but an alarmist to start thinking about them.

I agree the doomsday scenario is most likely not going to happen, but one does need to look at the ramifications just incase.
Japan, a large buyer of our debt, probably wont be buying as much in the near future due to their earthquake.
The middle east, well forget that..
American investors will continue to buy, but this requires moving money from the bond market or other investments, putting a downward pressure on those assets harming those who cant afford to cash out..
China.. Well China is buying our debt, but they have indicated they will not support us printing money to pay them back.

The TOTAL debt of the US Treasury, now exceeds the total value of all business conducted in the USA in 2010..

And there was an international report a few months ago that says that if our national debt goes up another 50%, we are insolvent. (trying to relocate this report).. at the current rate of debt accumulation, thats about 4-5 years away..

[Dutchman01]

Originally Posted by JazzyTallGuy

Neither is likely to happen because quite frankly to many countries around the world have a vested interested in keeping the American economy from collapsing. The United States imports 1.9 TRILLION dollars a year. For many countries around the world the United States is there largest trading partner.

Also the FED has a vested interest BY MANDATE to insure the economic stability of the United States.

It's nice to think of these doomsday scenarios but things are going to have to get a hell of lot worse than they are now for anybody but an alarmist to start thinking about them.

Then call me an alarmist.