A year or two?
The Federal Reserve won't be able to monetize the US government's debt forever. We've already hit the wall and now we're just waiting for our butts to catch up and slam us into the wall harder.
A year or two, yes. There seems to be a disconnect between the two bolded statements above. I don't see any indication that this won't be sustained for quite some time -- far longer, perhaps, than a year or two.
Well, at 20T of immediate debt, interest due at 5% would be equal to the total take from personal tax returns. We are at 17T now, and they are holding things together only by keeping interest at 0%. So the "year or two" or the "some time--far longer..." translates to how long can the FED keep the rate at zero.
I have thought this has several parts that have to be considered separately.
(A) debt that is longer term like 10 year T bills
(B) debt that is forced on people - like money market accounts which buy the government accounts, or the cash side of stock market accounts which I believe many are forced to hold government debt
(C) US debt that is forced on retirement accounts through pressuring the fiduciary agents. In this arena US debt is only "one part" - but it is a part.
People are dumber than you might think. Right now you can get 3-4% on a Australian $ savings account, but in the US you have to go to riskier investments to accomplish that rate of return - corporate bonds and dividend paying stocks.
As far as I can tell, serious capital flight has not yet occurred.
