You may not know it, but something major went down recently that should have every American paying attention. The US government tried to borrow $16 billion through a routine Treasury auction.
But it turned into a complete disaster.
So bad, in fact, that the Federal Reserve had to quietly step in and buy $2.19 billion worth of bonds that private investors didn’t want.
When They Don’t Want Your Debt
When the US government needs to borrow money, the Treasury Department holds regular auctions where it sells bonds, notes, and bills to investors. It’s like eBay, but instead of selling old furniture, the government is selling IOUs backed by the “full faith and credit” of the United States.
These auctions happen on a predictable schedule throughout the year, and they’re usually boring affairs that markets barely notice. Investors compete to lend money to the US government, which keeps interest rates low and everyone happy.
The recent 20-year Treasury auction was the opposite of boring.