So my question is — What’s going to happen to the balance sheet of the Fed in such an environment where foreign countries which have absorbed a lot of government, US government debt in the last few years might be reluctant, and have given signs to be reluctant, to continue absorbing that debt? What’s going to be the role of the Fed in such an environment and will it be able, really, to get out of this situation, or implement this exit strategy in such an environment? – Fernando Saldanha
In his brief reply to Saldanha’s question, Fed economic historian Mike Bordo eventually, and simply, stated that a slackening in foreign demand for treasuries "could really hamper [the Fed's] exit policy."
That exchange is now over 2 months old, but since Doom was seeing possible evidence for this same slackening among foreign central banks just yesterday, their dialog may still prove timely.
