Very high interest rates, very high inflation...
Increase in interest rates for starters.
1978 redux on steroids.
As the interest rates on the bonds go up, the Fed will get less money up front. Therefore, they will have to borrow more—and print money to pay it back. Rinse, and Repeat.
That will drive up the prime rate on mortgages and other “prime” customers. Those with lower credit ratings will not be able to get loans without usary level interest rates.
That will cause consumers and companies to put off making capital purchases. You will drive your car into the ground because it will be more expensive to buy one.
Savings will dwindle, because you will tend to buy your staples NOW rather than wait until next week, because the price will go up. 12% inflation means that your core baskets of goods will rise about 1% per month. So, consider your $200 shopping bill this month will be $212 next month. Gonna buy that 5 pound bag of sugar now, or wait?
Because savings have dwindled the banks have less to loan. This means production will drop, and you will have even more dollars chasing after fewer products.
Wages will rise, but not enough. Remeber the days of 12-15% raises every year?
Thats just the start, and its just the consumer side. The corporate world and state-economics will be worse.
And THAT’s why this is important.
“What, specifically, will happen when our debt isn’t purchased by anyone?”
It will be purchased, it’s just that it will be expensive.
Unfortunately, the Treasury will be purchasing it more and more
but what exactly will happen? ————Bwaney will have Fannie buy it-—with an IOU...??? LOL
It is happening. It's not like one day the bond sale goes fine and they sell everything they want to, and the next time, nobody buys anything at all. But we are on that trend. Maybe next time they have to offer 1/10% more than last time to sell them all, maybe after that they have to add another 1/10%, and so on.
Look at that graph of the interest rate, once it broke 3% it's gone nowhere but up. And nobody is even guessing as to where the first "pause" might be. Is it here at 4%? Would it be at 5%? 10%?
And mortgage rates will move pretty much the same amount. Maybe not the same day, maybe more in one day than they should, maybe less one day than they should, but if this 10-year note goes nowhere but up, then 30-year mortgage rates will go nowhere but up too.
And then there's inflation, because it's another SYMPTOM of too much money being printed (not an EFFECT caused by high interest rates), and job losses because it's harder to borrow money for the things that businesses normally borrow for.