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All that "limits" the amounts that can be bought in the auction are total reserves in the system. However, reserves are more or less supplied on demand by the Fed (especially in the case of Treasury auctions because the Fed is the fiscal agent of the government).

Above doesn't sound right to me. Right now the Fed is not buying any treasury securities. All new supply in treasury auctions must be bought by other buyers.

What is interesting is the fact that the Fed has announced its intention to drain reserves from the system. On the other hand, deficit spending (all other things being equal) increases reserves in the system. However, both can (and will) be done

I don't think both can be done at the same time.

The Federal Government's bond sale operations should really not be thought of as "borrowing" operations. They are "reserve and money supply management" operations. Unfortunately, this trips everyone up because everyone thinks of "bonds=debt"

Treasury securities are debt. I am having trouble thinking of these as anything else.

If the Fed is able to successfully shrink its balance sheet, the treasury securities will end up being only temporarily held by the Fed. In this scenario, an argument can be made that the Fed did not monetize debt. Is this what you meant by "reserve and money supply management" operations? If so, it only applies to treasury debt held by the Fed which is a small percentage of total debt.

Debt as of end of last month stands at 20.493 trillion. This can be divided into 5.690 trillion held by intragovernmental entities and the rest (14.803 trillion) is classified as public debt.

Intragovernmental refers to agencies like the social security trust fund, medicare trust fund, military retirement fund and various other mostly pension funds attached to more than 200 federal agencies.

Public debt holders refers to Foreign holders, the Fed, mutual funds, state and local government, private pension funds, banks, insurance companies, individuals, corporations, trusts and estates, etc.

Surely the above non-Fed holders think of treasury bonds as debt that they are owed. In any case, the reason I looked into this topic was to understand who buys treasury bonds and how interest rates could go up if these buyers demanded higher rates. The list of current owners gives us a good idea of who the buyers are. A lot of the demand, especially from government entities and regulation bound banks and insurance companies is probably price insensitive. But I can also see private buyers holding out until enticed by higher rates.

https://www.treasurydirect.gov/govt/reports/pd/mspd/2018/opd...
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