Central bank buying govt debt or QE is basically just maturity transformation. The Fed / ECB / BoE buys 10 year debt and issues cash which is also a form of govt. debt. IMO, when interest rates are as low as they are, it is foolish to issue short term debt. A lot of people like Martin Wolf and John Cochrane have been calling on govts to take advantage of the low interest rates and issue perpetual (or 50 or 100 year) debt and insulate themselves from sharp increase in inflation or interest rates.
if they find free market buyers for 100 year debt at current interest rates, sure. I'm not sure there will be many, so the central banks would end up buying most of it themselves.
Soros is also advocating perpetual bonds for the EU/ECB, especially Club Med countries, with the whole union guaranteeing the debt. Northern EU member states are already subsidising the south/east member states, something like this would set it in stone for a long time.
Pension funds are required to own some percentage of their assets in govt bonds. Also, many high net worth individuals have a strong preference for safe assets like govt bonds. And then there are speculators who think interest rates will fall and they'll make killing by actively trading on long term bonds. So, there will be buyers. Not all of it is being purchased by central banks.
true, there are some free market participants but central banks such a big % of the buyers that if they stopped buying, rates would shoot through the roof
I'm not so sure about that. When the Fed was tapering and starting to raise rates back in 2018, the bond market flashed warning signs in December 2018 with long term rates falling sharply and the yield curve inverting.
Then there's also the market expectations of whether the Fed is willing to go with negative interest rates, which would influence the behavior of bond traders.
