The only reason the US can borrow money at 1% for a 30 year bond is because the federal reserve and other reserve banks such as in Japan and Europe are subsidizing that. The Fed Reserve has some 4 trillion dollars of assets on its books, including bonds and securities. The securities aren’t a problem so long as the Fed doesn’t dump them into the market (sell them) but simply keeps hoarding them, and continues to buy more with more invented money.
For the treasury bonds, the Fed is legally obliged to not make a profit, so when bonds come due and the US treasury transfers money to the Fed then at the end of the year the Fed simply transfers it back to the treasury again, minus costs of overhead and paying the dividends to large banks that own stock in the Fed. So it’s basically a huge scam.
Japan owns more US debt than does China. Japan is also heavily leveraged with its own reserve bank, and is doing the same thing. You notice a pattern: reserve banks around the world are printing or digitizing money out of thin air and using it to buy US treasuries, but why? Because the US is the globe consumer of reliability that keeps the world economy afloat. The world economy keeps going at the cost of the US importing a billion dollars a day from other economies, like those of China and Japan. That’s why China and Japan are happy to keep loaning money to the US.
How long is that sustainable? We are using borrowed money to over-consume so that foreign economies keep going by selling us their goods and services. And there is no way the US can ever pay back 20 trillion dollars. Although remember that maybe up to half of that is debt held in the US already, by the Fed and by US federal government departments like social security, and also by major banks.
The Fed Reserve is legally forbidden from purchasing treasury bonds directly so it does so via the intermediary of the large banks: large banks buy treasury bonds and then sell those to the Fed for a small fee, thus “everybody wins”… except the US taxpayer who is now born into the US owing over $300,000 from the very beginning.
Debt is bad, but a small amount of debt is good if managed well because it allows you more capital to invest in something that produces a rate of return higher than the cost of servicing that debt. But we aren’t just taking about the straight 20 trillion in already existing debt, we are also talking about unfounded liabilities in social security, Medicare and welfare that reach up into the quadrillions.
I’ve heard liberal leftists, always the apologists for big government (when was the last time you heard any democrat even mention the US debt or deficit as being a problem?), say the same thing as Carleas is saying, “don’t worry about the debt”. Sorry, but some of us have this little thing called common sense. We realize that the US economy, a consumer economy, with more outstanding debt than the size of the entire US yearly GDP and then constant deficits on top of that plus even more unfounded liabilities, in an economy that is basically stagnating and already not working for most Americans, is a bad thing. The US will eventually suffer a loss of its credit rating, it already has with the former crisis over raising the debt ceiling and shutting down the federal government over failure to pass budgets.
The Fed is propping up the housing bubble, which never really popped, with QE 1-4 and is artificially stimulating the market for treasury bonds in the same way. Other nations are in on the game so long as US consumers keep buying the goods and services made by those other nations. But how long can this scam keep going? One cannot print oneself into prosperity, and debt isn’t a recipe for success unless the debt is kept to a responsible minimum and that debt is being used wisely. Neither of those are the case anymore.
The US consumer is already crushed with debt, personal debt and car debt and mortgage debt and student loan debt, to the point where the middle class is no longer able to lift the economy back up into a prosperous situation. But people like Carleas are happy to tell you to “not worry about it” and keep on going with business as usual, probably because they are personally not affected by it and don’t want to admit the whole house of cards is going to collapse down the road.