The Big Problem With Government Debt Isn't What You Think Summary: The world has been issuing debt. Not just a little debt, the entire Western world has been on a bond-issuing bonanza. But, while unlikely, what happens when the buyers are no longer there to soak up the debt? Or, what happens when the rates demanded by investors are so high that debt service cost becomes a Western country's biggest budget line item? It is not only if buyers can absorb the extra debt, its also if it makes sense from a real-money, buy-and-hold account. As a former Bond Fund Manager, at current levels, I am going to require a significant incentive to liquidate a current position to buy a new one, especially in corporate bonds that have more credit risk. To incentivize me, I would have to see a possibility for a significant pick-up in return without a significant risk to my portfolio. Otherwise, it does not behoove me to trade. Explain the relationship between treasury debt and swap rates. With current rates, does it make sense to increase or decrease the issuance of long-term bonds? Why? What risks face the Treasury market by Hedge Funds being a major source of Treasury liquidity at the current moment