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Vin53 · M
The issue is that the US Treasury has to frequently sell new T-Bills/Notes/Bonds to make sure they have the cash to pay off maturing bonds. The "full faith and credit" that the dollar is based on is we pay off our bonds when they mature, period.
The Treasury sold a fair tranche of (iirc) 17 week and 10 year bonds today. Auctions for these happen multiple times a week.
If you have a lot of US bonds and you dump them cheap, nobody buys the Treasury offerings because they can get the same things cheaper.
Which means the Treasury doesn't get the cash to pay off maturing bonds.
Which means we default on the next bonds that come due.
That's the threat. Yes, you get hurt because you're dumping your bonds at a loss. But the US gets utterly farked the moment the first mature bond is presented and not paid because there's no money to do so.
The Treasury sold a fair tranche of (iirc) 17 week and 10 year bonds today. Auctions for these happen multiple times a week.
If you have a lot of US bonds and you dump them cheap, nobody buys the Treasury offerings because they can get the same things cheaper.
Which means the Treasury doesn't get the cash to pay off maturing bonds.
Which means we default on the next bonds that come due.
That's the threat. Yes, you get hurt because you're dumping your bonds at a loss. But the US gets utterly farked the moment the first mature bond is presented and not paid because there's no money to do so.