Central Banks now own roughly $18 Trillion of the $54 Trillion global tradeable bond market. So my question to the class is this - How on earth do they unwind this monstrosity without serious economic and financial consequences? Where do the buyers of $18 trillion in tradeable bonds come from? Source - http://www.zerohedge.com/news/2017-...n-third-entire-54-trillion-global-bond-market
1) they unwind slowly enough so as not to do any harm 2) in long run bonds mature, banks get money back perhaps creating deflationary pressure, and new bank loans into economy compensate to prevent deflation.
Ahh - So where do you find buyers for the 18 Trillion in bonds that nobody outside of the Central Banks wanted in the first place? Or are we simply going to let $18 Trillion leave the global economy without being replaced? Bonds are debt - when the debt matures the money disappears as there is no longer a debt to justify the existence of the money. The consequences of not re-issuing that debt are severe.
1) everything sells at a price to buyers. this is called the law of supply and demand 2) nobody wanted them in first place because economy was collapsing now they are valuable because RE prices are up 3) no idea how $18 trillion would leave the economy??? Banks bought the bonds and $18 trillion is in economy
what??? Fed buys bond for money, when bond matures bank gets money bank, it does not disappear. if economy needs new money at time of maturity it can create it.
