In terms of sheer total dollars, the U.S. government has never borrowed as much money as it has in fiscal year 2009, which ends this month: nearly $2 trillion, according to Mark Gongloff in the Wall Street Journal.
So far, defying the expectations of deficit hawks and inflation scare-mongers, the U.S. Treasury has had no problem finding willing takers for its bills, notes and bonds. The yield on the 10-year bond, reports Gongloff, is just about the same as it was a year ago, when the financial crisis spurred the heaviest borrowing to begin. Inflation, as confirmed by the latest data on U.S. consumer prices, is still not a threat.
But what's really interesting, according to Gongloff, is that the amount the U.S. might need to borrow in fiscal year 2010 is expected to be far less -- perhaps "only" $1 trillion, writes Gongloff. That's still quite a lot of money, of course, but the fascinating implication is that it means we may have already passed the peak of the Treasury supply glut. Throughout the spring and summer, the U.S. Treasury kept breaking records for the amount of debt it scheduled for sale each week. But it doesn't look like we're set for a repeat of that high-wire act in the year ahead -- barring some new, disastrous financial shock or war or other disaster.
Which means that speculators betting on inflation or a dramatic decline in Treasury prices could be in for a surprise. Once again, the Wall Street Journal's reporters are telling a dramatically different story than the Wall Street Journal's opinion page writers.
Treasurys have withstood what could be the worst of the supply storm. Those expecting a Treasury collapse might wait a painfully long time for payoff.