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Once we get to the one year anniversary of the upward inflection point last year due to Brandon’s Russia sanctions then their “inflation!” is going to go away… looks like May or June …. 295 to 301 is 2%… then what are they going to do?
If debt limit isn't raised in US enters default what do you think? Is there a rally or selloff in Treasuries?
I can see a case for both. If Government stops making interest payments why would anyone want to own the asset? But, at the same time if Government stops issuing Treasuries that are AAA rated there will be a shortage.
C, it would be chaos but I think we have to go thru it and learn from our mistakes…
Same with Musk launching that heavy spacecraft this week and it blew up…
You make adjustments and try again… it’s normal in technical endeavors…
everything works that way…
From MMT perspective MMT says “all prices are a function of what govt pays for things and what govt lets banks lend against things”
So even if they default and Fed allows banks to still price the bonds at par for regulatory purposes the price of the bonds is going to be par..
Also GOP is saying Treasury can prioritize payments from the TGA and wants Dems to come up with a priority scheme with Treasury operations highest priorities…. Drag queen shoes for Kindergartners would be very low priority, etc..,
2 comments:
Matt,
If debt limit isn't raised in US enters default what do you think? Is there a rally or selloff in Treasuries?
I can see a case for both. If Government stops making interest payments why would anyone want to own the asset? But, at the same time if Government stops issuing Treasuries that are AAA rated there will be a shortage.
Curious on your take.
Cheers
C, it would be chaos but I think we have to go thru it and learn from our mistakes…
Same with Musk launching that heavy spacecraft this week and it blew up…
You make adjustments and try again… it’s normal in technical endeavors…
everything works that way…
From MMT perspective MMT says “all prices are a function of what govt pays for things and what govt lets banks lend against things”
So even if they default and Fed allows banks to still price the bonds at par for regulatory purposes the price of the bonds is going to be par..
Also GOP is saying Treasury can prioritize payments from the TGA and wants Dems to come up with a priority scheme with Treasury operations highest priorities…. Drag queen shoes for Kindergartners would be very low priority, etc..,
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