This article talks about the deficit problems that the US government has been facing getting out of these torrid economic times. It mentions that despite the fact that the budget deficit is exceeding $1 trillion, the US government continues to sell record amount of debt which further raises the deficit. The question being raised here is the debate over which amount of debt is reasonable and the various ways that must be sought to get rid of the deficits.
One of the main reasons for this huge debt selling is that more people are attracted towards fixed income funds as compared to stock funds. This is highlighted in the article which mentions that the demand for fixed income funds is 18 times more than the demand for stock funds.
At the end of the day, the US government needs to make a calculated measure when it should stop selling US securities to get out of this major deficit. However, with this economic volatility surrounding the whole world, that question still remains unanswered.
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