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By doing this they are saying that this is now the real value of these worthless derivatives which is maybe 40 times their actual value.
And you think these assets can lose value?
The MBS they bought are guarantied by Fanny/Freddy, themselves backed by the government, itself backed by the fed printing press.
Explain how they can lose value.
Btw they can also avoid interest rates risks by holding those MBS to maturity. It's not like they need the money soon.
They lose value if the dollar loses value or if the market demand for them diminishes.
Spain in "recovery" ! maybe they can start buying us treasuries
https://uk.finance.yahoo.com/news/spain-confirms-recovery-q1-gdp-090200160.html
Interesting explanation
https://www.youtube.com/watch?v=52zSqdBitKE
This guy has not understood how things are working.
First, he keeps saying printing money will create inflation and collapse the dollar. He never explains why we don't have inflation now. i.e. why don't wages increase as more money is printed. Until he reconciles his speech with this reality, he keeps missing the point and the fears he expresses never come to pass.
Second, his point about the fed forgiving the debt leaving no way to recoup the printed money is moot because the government could return the money from its taxes revenue. The entire point is moot. The fed don't need to forgive debt, because everything happens like this debt simply doesn't exist.
First, he keeps saying printing money will create inflation and collapse the dollar.
Just because it hasn't yet does NOT mean that the potential is not there.
Second, his point about the fed forgiving the debt leaving no way to recoup the printed money is moot because the government could return the money from its taxes revenue.
Ok so that will be 17 trillion now please followed by 60 to 150 trillion over the next few decades. Ok problem solved.
The MBS they bought are guarantied by Fanny/Freddy, themselves backed by the government, itself backed by the fed printing press.
Which goes back to the original question, if the Fed who is buying up to 90% of the newly issued Treasuries stops, who will buy them?
Which goes back to the original question, if the Fed who is buying up to 90% of the newly issued Treasuries stops, who will buy them?
As I said, the volume of new bonds to buy is much smaller than it was.
And there is a lot more cash available in private hands to buy them.
Retirees need to buy bonds to secure their portfolios.
Banks need to buy sovereign bonds to meet their capital requirements.
Capital simply has no other place to go. There is just too much of it.
As I said, the volume of new bonds to buy is much smaller than it was.
And there is a lot more cash available in private hands to buy them.Retirees need to buy bonds to secure their portfolios.
Banks need to buy sovereign bonds to meet their capital requirements.
The deficit still needs to be funded and the Fed has been doing it 60-90%) at great low rates.
Unless retirees are forced to buy bonds they won't buy them at no the no yield rate they are at today.
Higher rates would be a disaster for the US government as the deficit would explode as borrowing costs would rise.
Private capital right now is NOT going towards US bonds it is going to the stock market, real estate and other asset classes
dunno what they do. The probably..... buy more gold!!!!
No I don't think so. If the SDR thing becomes a possibility maybe or if the money that has been printed starts creating inflation maybe.
But most likely it will just be more of the same, which means gold doesn't make sense.
dunno what they do. The probably..... buy more gold!!!!
dunno what they do. The probably..... buy more gold!!!!
That doesn't help.
Oh, but it does. gold is the answer to everything. I heard it on the radio.
Oh, but it does. gold is the answer to everything. I heard it on the radio.
You need to turn off the Limbaugh and Levin
You need to turn off the Limbaugh and Levin
Many Austrians as well
Gold is just another asset class. I don't understand all the emotion on both sides- there is a significant anti gold crowd(there is no anti sugar or coton crowd) and a gold bug crowd that thinks all would be well if the government were on a gold standard.
Gold has its place as a commodity hard asset ( as does oil, real estate, silver, uranium, etc) but it doesn't deserve the scorn or adoration that it receives.
I don't understand all the emotion on both sides
Having gold equates to survival, people get emotional about survival.
all would be well if the government were on a gold standard.
It prevents the unavoidable failure of fiat money. How is that not true?
all would be well if the government were on a gold standard.
It prevents the unavoidable failure of fiat money. How is that not true?
If government is issuing dollars based on a gold standard they could still easily abuse it by
-overstating the amount of gold they claim to have
-leasing it without any one knowing
-lowering the ratio of the gold to dollar
There are all kinds of tricks that can be played with a gold standard
The only gold standard that would "work" would be if gold were universally used as money -it's not. It is an asset only.
A gold standard also removes from the population a commodity that could otherwise be used for jewelry, industry etc as governments would have to hoard it and vault it, which would make whatever the government didn't hoard much more expensive
Unless retirees are forced to buy bonds they won't buy them at no the no yield rate they are at today.
Higher rates would be a disaster for the US government as the deficit would explode as borrowing costs would rise.
Higher rates would kill growth, as there is still too much leverage. Killing growth would send the rates back down (as we see happening now).
This negative feedback ensures rates cannot jump up.
If the SDR thing becomes a possibility
You guys are soooo desperate to find something that could go wrong.
I said it above: Countries accumulating reserves are doing so to support the dollar relative to their currencies.
Buying SDR would just send this thing up until no one wants it. It would not lower a currency relative to the dollar. In addition the IMF is more or less controlled by the US. They will not undermine the reserve status of the dollar.
In addition the IMF is more or less controlled by the US.
That is what is important to remember- any IMF move would be dollar positive-
Ok, so what is the better alternative?
elimination of legal tender laws and let each country and individual use what they like-inevitably the best currencies will be the most used, not the ones that are forced upon us
Oh, but it does. gold is the answer to everything. I heard it on the radio.
You need to turn off the Limbaugh and Levin
I refuse. everyone knows that they tell nuttin' but the truth and the rest is made by the liberal media.
elimination of legal tender laws and let each country and individual use what they like-inevitably the best currencies will be the most used, not the ones that are forced upon us
IOW gold and silver
elimination of legal tender laws and let each country and individual use what they like-inevitably the best currencies will be the most used, not the ones that are forced upon us
IOW gold and silver
My guess would be people would chose those, digitized version, crytpos and government ones deemed to have sound fiscal policies
This is a great article explaining the current mercantilist situation we have today. Also read the comments below the article. Pettis really knows this stuff
cold.
http://globaleconomicanalysis.blogspot.com/2011/07/hugo-salinas-price-and-michael-pettis.html
« First « Previous Comments 154 - 181 of 181 Search these comments
The United States is able to incur massive deficits funded in part by foreign purchases of U.S. debt and more recently and increasingly through the Federal Reserve’s (the Fed) purchases of T Bonds as part of their multi-year/multi trillion dollar quantitative easing (QE) program whereby they print dollars out of thin air to buy them.
As a result of QE more than a few nations, notably Iran, Russia, China and Brazil have become increasingly concerned that the value of their T Bond holdings are being diluted by the Fed’s massive money printing campaign and have made efforts to reduce their need to hold dollars for settling their trade accounts. Last October, China called for the world to “de-Americanize†because “the destinies of others are in the hands of a hypocritical nation that have to be terminatedâ€.
Such calls to “de-dollarize†have increased and been joined by Russia as the west battles Russia’s designs on Crimea and Ukraine with economic sanctions. Most recently, Russia and China signed a 30 year gas deal that supposedly does not involve dollars for payment.
What happens when the Fed and China stop buying and Belgium can't cover the shortfall?
Here is an analysis and list of the largest foreign holders of U.S. Treasuries as of March 2014 and of the top gold holding countries:
http://smaulgld.com/foreign-holdings-u-s-treasuries/
#investing