And the fiscal balance has only gotten worse under President Donald Trump. The deficit surpassed $1 trillion in the first 11 months of the fiscal year, which just ended last month. And the Congressional Budget Office forecasts the shortfall this fiscal year will exceed $1 trillion. That all means the Treasury will need to keep increasing its debt auctions to fund the budget shortfalls.

In the coming decade, debt as a percentage of the gross domestic product will reach 100%, CBO estimates show. That would be greater than any time since just after World War II. Before the financial crisis, debt-to-GDP was about 40%.

The growth was more than manageable in the years after the crisis because the Fed bought significant amounts of Treasuries (from dealers post-auction) with its quantitative easing, or QE. Some argue the Fed used QE to “monetize” the debt, which pumped trillions of dollars worth of cheap cash into the banking system and kept U.S. funding costs artificially low. Whatever the case, there’s little doubt the buying helped dealers clear their inventories.

That started to change in late 2017, when the Fed began to gradually unwind those purchases, reduce the size of its balance sheet and drain the excess cash held in bank reserves. The Fed now holds roughly $3.9 trillion in assets, down from $4.5 trillion in January 2015. More than half of the total is in Treasuries.

Without the Fed, which was arguably the biggest buyer of U.S. debt during the QE era, dealers have had to pick up the slack. In May, primary dealers’ outright positions in Treasuries reached an all-time high of almost $300 billion -- more than double what they were the previous year.

What’s more, post-crisis rules have led banks to prefer cash over Treasuries, which contributed to the liquidity issues in repo markets, according to Michael de Pass, head of Treasuries trading at Citadel Securities.

“The Fed has shrunk its balance sheet in a meaningful way, resulting in reduced reserves in the system,” he said. The cash squeeze has “been further exacerbated by increased issuance, resulting in high levels of Treasury collateral settling into the market.”

Dealers aren’t getting as much help from foreign investors to soak up all that additional supply. Big creditors like China and Japan have slowed their buying of Treasuries in recent years. Overall, the share of foreign official holdings has shrunk to just over 25% this year, from a high of about 40% in 2008.

That waning appetite been reflected in the amount of bids investors submit versus the actual amount sold, known as the bid-to-cover ratio.

According to an analysis by John Canavan, Oxford Economics’ lead analyst, the ratio for 3-, 10- and 30-year debt sold each month has fallen to 2.39. That’s down from 2.89 times in January 2018, just before the Treasury began boosting its sales, and far lower than a high of 3.48 times in December 2011.