Can the U.S. pay off the national debt without printing more money?
By mid-August, 2011, the Federal Reserve will hold over $1 trillion of the $13.6 trillion U.S. national debt, making it the largest holder in the entire world, greater than Japan or China. Right now it holds over $821 billion worth of treasuries, roughly equal to Japan’s stake in July.
Since August 19th, the Fed has bought on average $4.625 billion more treasuries a week, a pace that will bring it over the $1 trillion milestone in about 38 weeks. That’s if nothing changes with the Fed’s current plans to sell off more than $1 trillion of its mortgage-backed securities holdings and reinvest them in treasuries.
Making matters worse, in a speech on October 15th, Fed Chairman Ben Bernanke set the table for further treasuries purchases on top of what the Fed already holds.
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