And it would mean China could continue to buy US Treasury securities at a cheaper price to make up for the declining value of the dollar, which hit a new low for the past several decades today.

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Once a municipal bond is refinanced, (prerefunded) the issuer uses the proceeds of the new issue and purchases US Treasury securities (collateral) that are used to pay the interest and principal on the original, more expensive debt until maturity or the call date, whichever the escrow agreement states.

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As I understand it, our national public debt was borrowed, in US dollars, from India and China in the sale of Treasury securities purchased with the US dollars that came from the sales of consumer goods in trade imbalance that has lasted for better than a decade.

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During 2000, Mr Greenspan invested in safe US government bonds, or Treasury securities as they are called.

BBC: Greenspan plays it safe

For example a US Treasury would have a very low risk weighting while Mortgage Backed Securities backed by subprime loans would by definition imply a higher risk weighting and thus a higher capital requirement.

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So they print money to tell themselves and us a lie, just as easy Fed policy and massive purchases of Treasury securities tell the government the lie that it is creditworthy.

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