Central banks are causing income inequality - for IWOG
« prev   random   next »

3
1

Central banks are causing income inequality - for IWOG

By anotheraccount following x   2016 Jun 11, 5:33pm 1,315 views   4 comments   watch   sfw   quote     share    


what iwog said before:
- invest into NAC, it's leveraged so you can get 6% yield, otherwise no point putting money in bonds because the yields are too low
- housing earns 5% yield as bond yields go lower
- bond yields are going down because rich people have too much money. It's not the Fed (or other central banks) buying bonds or holding huge portfolios of them.

Iwog is a rich person (probably worth more than 5M). There is no way he is buying 30 year bond at 2.4% based on his statements. I think he represents a lot of rich people.

My point here is that by keeping rates too low for too long and raising prices of other assets concentrated in the hands of the rich, the Fed has helped create income inequality.

Your statements have already shown the lapse in logic in your argument.

1   iwog   ignore (3)   2016 Jun 11, 5:44pm   ↑ like (0)   ↓ dislike (1)     quote      

No I'm not buying 30-year bonds because:

1. The returns are far worse than I can obtain from real estate.
2. NAC as you said.
3. I consider careful municipals to be just as safe, earning 4-5%, generally insured, and they pay double tax-free income. That's what I keep in trust accounts.

HOWEVER the returns from long bonds are safe, federally tax free, and substantial equity increases can be had as rates sink lower into the recession.

They aren't bad for people who don't camp the markets like I do.

2   anotheraccount   ignore (1)   2016 Jun 12, 10:46am   ↑ like (0)   ↓ dislike (0)     quote      

iwog says

HOWEVER the returns from long bonds are safe, federally tax free, and substantial equity increases can be had as rates sink lower into the recession.

They aren't bad for people who don't camp the markets like I do.

How many other people do you know that are buying 30 years in such volume that would drive yields down? I've pointed out central banks. Pensions funds. Insurance companies. Don't see rich people on this list.

3   iwog   ignore (3)   2016 Jun 12, 4:38pm   ↑ like (0)   ↓ dislike (1)     quote      

tr6 says

How many other people do you know that are buying 30 years in such volume that would drive yields down? I've pointed out central banks. Pensions funds. Insurance companies. Don't see rich people on this list

Doesn't really matter. It's a market like any other market. You can get large gains in the 30-year if interest rates fall so you can't just talk about yields.

Like I said, there are numerous other options. Also the 10-year is mostly controlled by money market accounts. That ocean of cash many corporations are accumulating need to be liquid and are therefore stored in bond money market accounts.

4   SubOink   ignore (0)   2017 Feb 10, 5:47pm   ↑ like (0)   ↓ dislike (0)     quote      

NAC question:

So bond yields have come down since the 80's. But when I look at a chart of NAC its been averaging 14-15. It was there in 2000. How come it doesn't have a continuous slow up curve as yields have a slow down curve?


Comment as anon_1a476 or log in at top of page: