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<p>[QUOTE=&quot;Cloudsweeper99, post: 1410324, member: 3011&quot;]&gt;Originally Posted by Peter Schiff </p><p>... Somebody is going to have to buy all of those bonds and if the Fed is not going to do it, who will? Right now, the Fed is doing QE. Whether they want to officially call it QE, they are doing it. They are doing Operation Twist and buying government bonds. The Fed has to buy government bonds to keep interest rates from skyrocketing. As they stop, rates are going to go up and when they it will choke off the ‘recovery’ that is dependent on low rates. So, if you take the Fed at its word, this is going to be a bigger disaster (than Europe). I think there is going to be more suffering. If you think that the riots are bad in Greece, wait until you see what the riots are going to be like here.&lt;</p><p><br /></p><p>I think the answer to Peter Schiff is that in a normal free market, a higher interest rate on Treasuries would easily permit them to be absorbed by the market.&nbsp; Comments about skyrocketing interest rates are just meant to stir up the subscriber base.&nbsp; In fact, the world is starved for yield, and a return to a &quot;normal&quot; interest rate of, say 5%, would result in enormous demand for treasury bonds by insurance companies, retirees, and pension funds seeking to meet the actuarial assumptions built into their products.&nbsp; It is only the government insistance on borrowing at near zero interest rates that causes the problem.&nbsp; I know all of the arguments about the government not being able to afford to pay 5%, but this is a red herring.&nbsp; Higher interest rates would force lower government spending, and that&#039;s not a bad thing.[/QUOTE]</p><p><br /></p>

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