Monday, October 19, 2009

Treasuries Show No Lost Appetite With Dollar Declines

They still don't get it. The media is baffled as are many analysts and economists as to why Treasury demand remains so robust. They don't understand that the money to buy Treasuries comes from Government spending itself. There is no "lending" per se. As long as the Gov't is deficit spending and the Fed is maintaining zero-percent rates, there is going to be plenty of money to buy Treasuries.

They have it all wrong, but refuse to even try to understand the true dynamic of what is happening. And if you try to explain it to them, they will argue vociferously as to how you are wrong.

Here are some of the mainstream's "explanations"...

“The economic news, while mixed, still portrays an economy which could fall short of people’s expectations,”

“There is a lot of cash on the sidelines that needs to be put to work with over $3 trillion sitting in money market funds,”

“The same yield is more attractive” to foreigners because of the weaker greenback, said Todd White, who oversees government debt trading in Minneapolis at RiverSource Investments, which manages $90 billion of bonds.

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