patrick.net

bgamall4 says

Ok so what is the impact of lack of liquidity?

From my eyes I see a lack of faith in bond yields really rising. Once the Fed starts raising rates I will keep an eye on this topic.

However, for now only my key numbers
2.25%
1.87%
1.64%

bgamall4 says

Strategist says

So a doubling of the total debt is no big deal. With the super low rates, it could be argued that total debt today is more affordable than in 2000.


Basically, all or most of the money printing has been absorbed by the economy.

The achilles heal to all this is a lack of pristine collateral, ie Treasury bonds. They are necessary to making the deals. I am interested how the lack of liquidity, ie the shortage of treasuries, will affect treasury bonds. My thinking is that it will drive down the yields. But I am open to other opinions.

What the hell are you talking about?
There is an excess of liquidity, and lots of Treasury Bonds. Why do you think the rates are close to zero?

`The velocity of money?

indigenous says

`The velocity of money?

OK. That would indicate even more liquidity than we need.

No the money is not going any where, so we do not have an excess of liquidity.

Strategist says

The GDP has almost doubled since then too. (80%)

So a doubling of the total debt is no big deal. With the super low rates, it could be argued that total debt today is more affordable than in 2000

In 2000, the GDP was 10.15T and debt was 5.65T
In 2014, the GDP was 17.25T and debt was 17,8T

I believe that nominally debt is still growing faster than GDP.

The debt game on the federal side of the equation is over gentlemen.
Demographics have taken their hold and after 2022 we will have an expanded debt profile for 30 years after that and since so much of it is mandatory any recession from 2022-2052 will just make the nominal number bigger

I don't see this as much as a concern as others because I believe all government debt is just a ponzi scam so we will get A plus status in the bond market because we have the biggest economy and biggest military

Rates can stay low for a long time as history has shown us

Logan Mohtashami says

The debt game on the federal side of the equation is over gentlemen.

Demographics have taken their hold and after 2022 we will have an expanded debt profile for 30 years after that and since so much of it is mandatory any recession from 2022-2052 will just make the nominal number bigger

I read this is going to become acute at 2030. But that it will be over in about 2040.

The interest rates cannot stay low if inflation gets overheated.

The real problem is that government did not let the market reset.

Even with interest rates low there is no business investment primarily because of the above.

indigenous says

I read this is going to become acute at 2030

Right now if everything stays constant, by 2024-2027 time frame, all mandatory payments will exceed government revenue basing it on a 3% GDP model

The laws math are just taking hold, I remember thinking back in the late 1990's how these optimistic predictions weren't going to come true but then we always have to
add the factor model of politics into the equation.

With that I don't believe we will ever see any meaningful entitlement reform nor any major increases in taxes in general. Certainly the Bush Middle class tax cuts will stay put for a very long time.

It is what it is. I try to sympathize with the MMT crowd but the way the explain currency model borrowing just won't take hold to the general public. They need a more charismatic spokesperson to try to explain their thesis

Logan Mohtashami says

It is what it is. I try to sympathize with the MMT crowd but the way the explain currency model borrowing just won't take hold to the general public. They need a more charismatic spokesperson to try to explain their thesis

Yup, the MMTs in large part are responsible because of the floating exchange rate and targeted 2-3% inflation started by Nixon.

But it is irrelevant because it really is just a case of tyranny by the majority.