U.S. debt losing its purchasing appeal

Steve Henn May 25, 2009
HTML EMBED:
COPY

U.S. debt losing its purchasing appeal

Steve Henn May 25, 2009
HTML EMBED:
COPY

TEXT OF STORY

Steve Chiotakis: Bonds are a big deal for the federal government, and this week, it’s set to borrow $162 billion with an auction. But recently, the global appetite for U.S. debt has been on the decline. Here’s Marketplace’s Steve Henn.


Steve Henn: Lately, there haven’t been very many safe places for investors to stash their cash. So many bought U.S. debt at really low interest rates.

Bob Bixby: The federal government is able to borrow huge sums of money at virtually no cost, but it’s like a teaser rate.

Bob Bixby directs the Concord Coalition. He says as U.S. debt mounts, the government will have to pay higher rates to attract investors.

And already, there are signs of trouble. China used to lend the U.S. money for up to 30 years, but that changed when the Fed started printing money to bail out the banking industry.

Brad Setser: Over the past several months as a result of concerns about inflation, China’s been putting almost all of its money into short-term Treasury bills.

Brad Setser’s at the Council of Foreign Relations. He says economists are watching closely to see how many investors will lend the U.S. money for the long haul, and how much that new debt will cost.

In Washington, I’m Steve Henn for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.  

Need some Econ 101?

Our new Marketplace Crash Course is here to help. Sign-up for free, learn at your own pace.