[quote=davelj]If the Treasury can issue enough 30-year paper at 3% and turn around and collect 4.5%, that’s a positive spread of 1.5%. [/quote]

Allow me to reply to my own quote…

So you want to know who’s going to be dumb enough to take on 30-year paper at 3% do you? Answer: China and Japan.

Yup, Treasury’s going to go them with this plan and their first reaction’s going to be: “30 years at 3%? Go fuck yourself.” Then they’ll have a moment of clarity and realize that if they DON’T do this, they’re fucked even worse. So, yeah, they’ll eventually take a hit on the value of that debt – but they’ll avoid an even bigger hit to their economies that’s inevitable if the US slides into depression. So, net/net China and Japan will realize that they’re better off buying that crappy paper from us and taking it in the cornhole a few years down the road as opposed to taking it even deeper in the cornhole all drawn out from 2009-2011. Yup, Japan and China are going to subsidize a big part of this stinkin’ mess. Just as it should be.