The Household Sector

This article by Eric Sprott and David Franklin is a must read (warning .pdf). For months we at Blog Simple, and others, have been baffled by the ease with which the Treasury continues to be able to sell their wares, even though they pay little, no, or negative interest, depending on how you look at them.

Listen to this and then go read the whole thing:

So who really picked up the tab? To our surprise, the only group to actually substantially increase their purchases in 2009 is defined in the Federal Reserve Flow of Funds Report as the "Household Sector". This category of buyers bought $15 billion worth of treasuries in 2008, but by Q3 2009 had purchased a whopping $528.7 billion worth. At the end of Q3 this Household Sector category now owns more treasuries than the Federal Reserve itself.

So to summarize, the majority buyers of Treasury securities in 2009 were:
1. Foreign and International buyers who purchased $697.5 billion.
2. The Federal Reserve who bought $286 billion.
3. The Household Sector who bought $528 billion to Q3 – which puts them on
track purchase $704 billion for fiscal 2009.

These three buying groups represent the lion’s share of the $1.885 trillion of debt that was issued by the US in fiscal 2009.

Don't be lazy now, read it. And be afraid, be very afraid.
(h/t zerohedge)