According to CNBC, if Fed intervention in the financial markets is taken away, foreign investors will pull their money out of the U.S. as well. The news agency goes into deeper detail:
If the Fed were not buying $45 billion each month of our government bonds, investors both foreign and domestic would require a much higher rate of return. Investors have to be concerned about the record $17 trillion government debt (107 percent of gross domestic product), which is growing $750 billion this year alone.
In addition, holders of U.S. debt must discount the inflation potential associated with a record $3.6 trillion Fed balance sheet, which is still growing at $85 billion each month. Also, foreign investors have to factor into their calculation the potential wealth-destroying effects of owning debt backed by a weakening U.S. dollar.Sponsor Content