Are the primary dealers obliged to buy treasuries no matter what? It is said that treasuries are the highest quality debt because the government can always &quot;print money&quot; to pay the debt.
But, isn't so that the ones printing the money to loan to the government are the primary dealers.

If so is the reason it is said that the government can always pay their debt because the primary dealers are obliged to always loan to the government?

Is there a case in which the primary dealers could refuse to buy treasuries?


In general, are the primary dealers incentivized or compelled under the law to always bid for the treasuries?
I assume this refers to the U.S.
(Also, see this question/answer: link to question.)

If so is the reason it is said that the government can always pay their debt because the primary dealers are obliged to always loan to the government?

That’s one reason, but most people are unaware of this angle. I would argue that the usual reason given is that the central bank can buy government bonds in “unlimited” size.
There are limitations on this, and government debt issuance, but they can be bypassed at any time by issuing a new law. Another thing to keep in mind that jurisprudence around Treasury default is not settled, there are arguments that a Treasury default is a “more illegal” option than the Treasury not paying for spending that was authorised by Congress.
From the perspective of underlying economics, the reality that there is an open-ended buying capacity at the central bank is why people refer to currency sovereign debt as default risk free.

Is there a case in which the primary dealers could refuse to buy treasuries?

They submitted to an agreement to bid, so not really. At most, the bids might not cover the auction.

In general, are the primary dealers incentivized or compelled under the law to always bid for the treasuries?

Incentivised - certainly. They get first chance to bid on Treasuries, and their job is to have a sales force that is capable of finding bidders who will pay a higher price in the secondary market. This is why firms become primary dealers in the first place.
“Compelled under law” is a strong phrase; they have a binding contract to bid. Since primary dealers are financial entities whose overall activities are regulated by the Federal government, they would put themselves in a very awkward situation if they tried to break a legal agreement with the government.