Posted inAT+

The great federal-debt Ponzi scheme

The discrepancy between raging inflation and soggy Treasury bond yields remains a cognitive dissonance in financial markets.

There’s a simple explanation (and “Inflation is transitory” is NOT a full credit answer): The Federal Reserve and the commercial banks that depend on the Fed are virtually the only buyers of US government debt.

As long as the Fed is willing (and the market allows it) to buy arbitrarily large amounts of government debt, the price of US government debt is whatever the Fed says it is. It’s like the pump part of a pump-and-dump scheme in the stock market, except without the benefit of an exit strategy.