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<p>[QUOTE=&quot;Cloudsweeper99, post: 947103, member: 3011&quot;]This happens from time to time when there is a failed Treasury auction.&nbsp; If there aren&#039;t enough buyers, then either the primary dealers hold the bonds or the Federal Reserve [or another central bank] buys them.&nbsp; If carried to excess, this can cause the inflation rate to rise if the Fed doesn&#039;t sterilize the transaction.&nbsp; If another country buys US debt, they have to pay with US dollars, not IOUs.&nbsp; This hasn&#039;t been a big problem since many countries have a trade surplus with the US and need to do something with the dollars.&nbsp; Demand for Treausries has been large enough to keep interest rates low as people and insitututions seek a risk-free place to park money.&nbsp; But this too will pass and it would be dangerous to assume that things will stay this way forever.</p><p><br /></p><p>But to answer your first question more directly, there is no good reason why the government has to issue debt instead of printing their own money.&nbsp; Lincoln did this to finance the Civil War.&nbsp; Back then it was inflationary, but there are more tools to handle the inflation now and it remains an alternative that just isn&#039;t used anymore because central banks are viewed as a better way to control the economy than permitting Congress and the Treasury to do it.</p><p><br /></p><p>Edit: I hope that isn&#039;t political.&nbsp; It was intended to be economic and non-partisan.[/QUOTE]</p><p><br /></p>

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