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Title: What happens when the bonds mature? Post by: vokain on June 30, 2013, 04:40:56 PM Gov is inflating the bond bubble and bond prices, we all know this, but since they're the largest holder, will maturation yields just go back to paying the debt to their bond purchases?
Title: Re: What happens when the bonds mature? Post by: Lethn on June 30, 2013, 05:32:37 PM Like you say, it will either go back to paying off debt, or the more likely option it will collapse because the money they're trying to buy up the bonds with is becoming worthless so they'd have to print more and more in order to pay for it and because no one else except for them will really be taking part in the process you get the Weimar republic or Zimbabwe scenario.
Title: Re: What happens when the bonds mature? Post by: Fugger on July 03, 2013, 08:12:22 PM Ultimately an excessive money supply will result in more inflation. Governments typically refinance their outstanding bonds on a regular basis. That's an ongoing/revolving process. If they know (by announcement) that the central bank will buy more and more of their bonds, they will keep issuing them. This floods the economy with money. But if the economy cannot absorb all the money because it doesn't grow at a rate which is comparably to the monetary growth, at some point you could have an undesirable outcome.
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