Now that the stock market has officially turned into a bear market, a lot of people are starting to get excited. But that is premature. There will be no real excitement as long at the US government can sell bonds at will without effecting the interest rates. As Brad Setser reminds us….

The scale of growth in central bank foreign assets is hard to overstate, as is the extent to which central banks are now central to the financing of the US deficit. The US capital flows data significantly understate official purchases of US assets.