Where are the idiots at Standard & Poor's today? They should be asked to justify their clueless downgrade of the U.S. credit rating last summer. Remember that? Since then, rates have gone nowhere but down and the 10yr Treasury is making a new, record low yield today.
And while I'm at it, where's Jim Rogers, Peter Schiff, Rick Santelli and all the other clueless morons who've been warning of a spike in interest rates because of debt, rating downgrades, hyperinflation, and a collapsing dollar? Or Geithner, with his dumb comment about the U.S. having to earn back confidence to get a triple-A rating from S&P? What about Bernanke, repeatedly telling Congress that we must get our debt "in order" otherwise, we'll lose control of interest rates.
So, so, wrong.
10 comments:
1.25% here we come...
Resp,
Matt, 0.85%. Just like Japan.
This is too easy!
You see I am laughing.
We are worse than Greece. You think printing money is a good thing? No, It's a bad thing. Markets will figure It out and the interest rates are going to spike.
http://www.youtube.com/watch?feature=player_detailpage&v=YnKsgelpuHU
"markets will figure it out and then interest rates are going to spike."
They've already figured it out.
The Fed might let them spike, who knows?
If you read between the lines - interest rates may have to be raised to prevent a collapse in the value of the dollar - as higher govt deficits mean higher CAD, which means higher govt deficits which means... etc. Won't happen tomorrow but each day that passes that govt deficit just keeps inexorably growing.
And no, the national debt does not equal 'national savings'. It equals the savings of those who hold bonds, predominantly. The more money you have, the more money the govt pays you. Socialism in reverse. And it keeps compounding.
Anon: "If you read between the lines - interest rates may have to be raised to prevent a collapse in the value of the dollar - as higher govt deficits mean higher CAD, which means higher govt deficits which means... etc. Won't happen tomorrow but each day that passes that govt deficit just keeps inexorably growing.
This does happen under a convertible system where the cb has to defend the exchange rate and interest rate to prevent conversion in greater proportion than the cb is willing to accomodate. With floating rates, MMT claims that the only issue is controlling inflation, and it recommends a fiscal approach to that instead of monetary since monetarism rests on a presumption of a loanable funds market, which PKE denies.
Anon, You realize these rates are lower than inflation. Bond holders are losing real purchasing power by owning them: It is negative compounding! hardly socialism in reverse. They are paying a tax for the privilege of principal safety. Bonds lose less than a bank deposit or risky investments in an economy with tons of existing unused capacity, unsold inventory and over investment.
Anon,
The Fed is KEEPING RATES UP.... this rally in the USTs has only re-ensued as the Fed has apparently run out of shorter dated maturities to swap out for longer dated ones (Twist), which is supposed to end by June anyway...
Once this Twist ends, then its off to Mike's 0.85% in earnest imo...
The BOJ is probably ready to intervene again for the Yen at 80 here... and the Fed and the ECB would probably do something if the USD gets much below 1.25 if past is prologue.
Resp,
Ryan Harris: That's right, investors are paying a premium for safety. It's not the first time this has happened (there are many examples, across all classes of assets) and it surely won't be the last. And who can blame them in this economic environment? Things are blowing up left and right and nobody has a job.
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