Treasury Auctions


#1

I thought it would be helpful to discuss how US debt is financed. I have noted some misconceptions in need of correction.
[LIST]
[] The Federal Reserve does not buy US Treasuries at auction. It buys them on secondary markets.
[
] Social Security trust fund assets are non-marketable government account series issues. They cannot be liquidated on secondary markets.
[*] The US Treasury does not call the Bank of China begging to borrow. China accumulates a surplus of dollars from trade with the US and invests those dollars in US Treasury securities.
[/LIST]
The US Treasury frequently has auctions marketing bills, notes and bonds. All noncompetitive bids are accepted. Competitive bids determine the interest rates paid.

source: Treasury Auction Announcement, 11/07 (pdf)

source: Treasury Auction Results, 11/07 (pdf)

source: MSPD, October 2012 (xls)

cf. Today’s Auction Results


#2

NOTE the ‘Tendered’ Vs the ‘Accepted’, starting to get scary, used to be it was 100%, but the world is backing off.


#3

Buying them through brokered deals on a secondary market or not, the Fed is still monetizing our debt. There is no way it ends well.