Stephanie Pomboy thinks so, according to Alan Abelson's Barron's column this week (scroll down). With the US debt burden a huge problem, and getting worse, policymakers may soon find themselves needing to widen the pool of buyers for US Treasury debt.
For example, one proposal Stephanie envisions is to require 401(k)s to hold a certain percentage of their assets in Treasuries at the risk of losing tax-free status. Another is encouraging public pension funds to fatten up the share of their portfolios given over to Treasuries. Still another is enticing companies to put a chunk of the nearly $1.9 trillion in cash "burning a hole in their pockets" into Uncle Sam's obligations, possibly as part of a deal for a tax holiday to bring home the huge cache of foreign profits sequestered abroad.
The impact of such actions, she feels, is bound to be ponderable. Were public pensions to boost their allocation to Treasuries from the current 6% to 16% (pre-Alan Greenspan, 24% was the norm), Stephanie reckons it would mean something like $300 billion of government bond purchases. And that, she points out, would be "chump change" compared with the potential additions by individuals and corporations.
As things stand today, nonfinancial corporations have $1.4 trillion in cash and a mere $48 billion in Treasuries. As for individuals and their 401(k)s, only $300 billion of total mutual-fund assets of $8.3 trillion are invested in Treasuries. All of which strongly suggests there's a mega-abundance of room for greater exposure to government debt.
Creating demand for Uncle Sam's obligations—"whether by carrot or stick," Stephanie says—has the not-inconsiderable advantage of "allowing fiscal stimulus to continue without all the inflationary consequences of dollar debasement" that accompanied QE1 and 2. And then she quickly adds, in patented Pomboy fashion, "until, of course, this, too, goes bad."
Sounds about right. The Political Class drives nation's finances off a cliff, and destroys the US dollar in the process. Then these hucksters and thieves force people to stash their Monopoly money in their retirement accounts -- or lose the tax advantages of such accounts.
And you can bet they'll do all this with their usual self-righteous and blame-someone-else manner.
I hope Americans would never let this happen. But I'm often amazed that Americans let FDR confiscate their gold in the 1930s. If things get bad enough -- and people get desperate enough -- they'll sometimes blindly follow public servants offering scapegoats and fake hope.