NASDAQ.com: Something Very Strange is Happening with Treasuries
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http://community.nasdaq.com/News/2010-02/Something-Very-Strange-Is-Happening-With-Treasuries.aspx[^] Here we go. The collapse of the dollar, probably triggered by the rise in interest rates at the Federal Reserve (my guess, at least.) And this, my dear friends, is why I've stopped contributing to my 401K plan about two years ago, and have started to "hoard silver". Not like 20 oz of silver is much, but that's what I've got.
I'm up past my bedtime, so can't really process all of this at the moment... But here's the deal. Normally, US treasury bonds are known as "risk free," because they're GUARANTEED to be repaid (The gov't can always print more money)... Now people are starting to wonder if their value will drop through currency devaluation, so there's a chance they might stop being "risk free". Now, if they're no longer riskless, the rates will have to go up, otherwise investors won't think they're worth it. That means treasury bonds now pay out more. So then it gets complicated... If you can get 5% returns from "riskless" treasury bonds, then why bother investing in any low-yield securities or blue-chip stocks? Just buy T-bonds! At this point, demand for everything ELSE will plummet, which will make T-Bonds even more valuable... So demand for T-Bonds will rise, and T-Bond yields will go down (More bids, so people will edge lower), and things will stabilize. And I dunno where I was going with this... My brain shut off about ten minutes ago, so I'm working on my math co-processor.... Wait... power's fading... Ok, sleep...
Proud to have finally moved to the A-Ark. Which one are you in?
Author of Guardians of Xen (Sci-Fi/Fantasy novel) -
Your new nickname is Dark Triad.
Watch the Fall of the Republic (High Quality 2:24:19)[^] Sons Of Liberty - Free Album (They sound very much like Metallica, great lyrics too)[^]
[punches air] YES. I am DARK TRIAD. Fear me !!!!! Why triad ? Why not diad, or parallelogram ?
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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CaptainSeeSharp wrote:
I only give nicknames as a summery of a person's personality. I don't know much about you.
oh oh oh what about me?
Mauve Dodecohedron Thus saith Dark Triad.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Mauve Dodecohedron Thus saith Dark Triad.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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so I'm purple and have 12 sides? Poshua Gay was always a popular nickname in primary school
I always got asked if I was a grouse christian.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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You don't think your dollar collapsed because of people who bought houses they could not afford, and defaulted ?
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
Christian Graus wrote:
You don't think your dollar collapsed because of people who bought houses they could not afford, and defaulted ?
Well, that didnt help, but the dollar has been based on faith for too long. Faith fonded on black gold backing. While oil is sold in dollars, countries need to get dolars ot buy the stuff. It is also used a foreign currency reserve. Since the Euro, the dolar has been devaluing because: 1) The Eurozone is the worlds largest oil buyer. 2) Russia and Iran have discussed selling oil and its products in Euros. 3) The oil for food program for Iraq was run through a Euro bank accont. (Thats why the US invaded, to keeop oil in dolars) 4) Many countries have been dumping dollars as their foreign curency reserve in favour of Euros. All in all, the writing is on the wall for the dollar. Especially since its prome supporter, the US, has a defecit the size of titan. It si not ecconomically viable enough to suport the dolar on its own. And in fact, the pin that poped the ballon of subprime was biofuels speculation and its effect on food prices globally. All due to AGW hyseria. Yet another reason I detest these lying scientists and politicians.
Morality is indistinguishable from social proscription
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[punches air] YES. I am DARK TRIAD. Fear me !!!!! Why triad ? Why not diad, or parallelogram ?
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Perhaps you have certain qualities that CSS equates with Kung Fu and Chinese gangs :laugh:
Well, I can see how that would be the case.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Christian Graus wrote:
You don't think your dollar collapsed because of people who bought houses they could not afford, and defaulted ?
Well, that didnt help, but the dollar has been based on faith for too long. Faith fonded on black gold backing. While oil is sold in dollars, countries need to get dolars ot buy the stuff. It is also used a foreign currency reserve. Since the Euro, the dolar has been devaluing because: 1) The Eurozone is the worlds largest oil buyer. 2) Russia and Iran have discussed selling oil and its products in Euros. 3) The oil for food program for Iraq was run through a Euro bank accont. (Thats why the US invaded, to keeop oil in dolars) 4) Many countries have been dumping dollars as their foreign curency reserve in favour of Euros. All in all, the writing is on the wall for the dollar. Especially since its prome supporter, the US, has a defecit the size of titan. It si not ecconomically viable enough to suport the dolar on its own. And in fact, the pin that poped the ballon of subprime was biofuels speculation and its effect on food prices globally. All due to AGW hyseria. Yet another reason I detest these lying scientists and politicians.
Morality is indistinguishable from social proscription
fat_boy wrote:
And in fact, the pin that poped the ballon of subprime was biofuels speculation and its effect on food prices globally. All due to AGW hyseria. Yet another reason I detest these lying scientists and politicians.
ROTFL - nice segue.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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fat_boy wrote:
And in fact, the pin that poped the ballon of subprime was biofuels speculation and its effect on food prices globally. All due to AGW hyseria. Yet another reason I detest these lying scientists and politicians.
ROTFL - nice segue.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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[punches air] YES. I am DARK TRIAD. Fear me !!!!! Why triad ? Why not diad, or parallelogram ?
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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:) But its true though. Look at the timing. Look at the hike in food and gas proces prior to the subprime collapse. It squezed people that bit more, and they fialed ot meet their repayments.
Morality is indistinguishable from social proscription
They were going to fail anyhow. I'm not sure how related it was. I would agree that making petrol out of corn is insane, and only occurs because of the might of the corn lobby and the fact that the US is geared towards growing a lot of corn. AGW or not, I think fuel alternatives are important to research tho, the oil ain't gonna last forever.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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I assume CSS will finish the job he started, and provide me with one.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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I assume CSS will finish the job he started, and provide me with one.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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I'm up past my bedtime, so can't really process all of this at the moment... But here's the deal. Normally, US treasury bonds are known as "risk free," because they're GUARANTEED to be repaid (The gov't can always print more money)... Now people are starting to wonder if their value will drop through currency devaluation, so there's a chance they might stop being "risk free". Now, if they're no longer riskless, the rates will have to go up, otherwise investors won't think they're worth it. That means treasury bonds now pay out more. So then it gets complicated... If you can get 5% returns from "riskless" treasury bonds, then why bother investing in any low-yield securities or blue-chip stocks? Just buy T-bonds! At this point, demand for everything ELSE will plummet, which will make T-Bonds even more valuable... So demand for T-Bonds will rise, and T-Bond yields will go down (More bids, so people will edge lower), and things will stabilize. And I dunno where I was going with this... My brain shut off about ten minutes ago, so I'm working on my math co-processor.... Wait... power's fading... Ok, sleep...
Proud to have finally moved to the A-Ark. Which one are you in?
Author of Guardians of Xen (Sci-Fi/Fantasy novel) -
Yeah, it was a long and involved reboot cycle... Involved lots of... well... Picture yourself in a boat on a river, with tangerine hills and marmalade skies... I kid, I kid... I don't shoot up on LSD before bed... Or do you shoot that up or snort it? I don't even know... But given the kind of dreams I usually have, you might think I do...
Proud to have finally moved to the A-Ark. Which one are you in?
Author of Guardians of Xen (Sci-Fi/Fantasy novel) -
See, watching conspiracy videos on the web all day is not going to get you a job.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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http://community.nasdaq.com/News/2010-02/Something-Very-Strange-Is-Happening-With-Treasuries.aspx[^] Here we go. The collapse of the dollar, probably triggered by the rise in interest rates at the Federal Reserve (my guess, at least.) And this, my dear friends, is why I've stopped contributing to my 401K plan about two years ago, and have started to "hoard silver". Not like 20 oz of silver is much, but that's what I've got.
You've got that backwards. As the author points out at the end, "Put another way, someone(s) is/are willing to not make money just for the sake of insuring return OF capital (the US can always print money to return it) rather than any return ON capital.". That's someone(s) betting on the opposite. They are willing to forego any return on capital because they expect the dollar to rise in value.
Chris Meech I am Canadian. [heard in a local bar] In theory there is no difference between theory and practice. In practice there is. [Yogi Berra]
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josda1000 wrote:
Here we go. The collapse of the dollar, probably triggered by the rise in interest rates at the Federal Reserve (my guess, at least.)
When do you expect this to happen? I have an idea, it wont happen, and in three months when I ask you why it didn't happen you will point to another article, video, book or blog as new proof it's about to happen.
Josh Gray wrote:
When do you expect this to happen?
Personally I'd say two years, but it is a prediction.
Josh Gray wrote:
it wont happen, and in three months when I ask you why it didn't happen you will point to another article, video, book or blog as new proof it's about to happen.
I'm not trying to necessarily prove it'll happen, it's a prediction. One with much historical backing, and Austrian economic thought.
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You've got that backwards. As the author points out at the end, "Put another way, someone(s) is/are willing to not make money just for the sake of insuring return OF capital (the US can always print money to return it) rather than any return ON capital.". That's someone(s) betting on the opposite. They are willing to forego any return on capital because they expect the dollar to rise in value.
Chris Meech I am Canadian. [heard in a local bar] In theory there is no difference between theory and practice. In practice there is. [Yogi Berra]
Chris Meech wrote:
That's someone(s) betting on the opposite.
Highly unlikely, in my opinion. I believe that this independent source just wants to keep the ball rolling (keep the government from going bankrupt) by making sure that their treasuries are bought. That's why they say that likely, the Federal Reserve is probably the entity making all of the independent trades.
Chris Meech wrote:
They are willing to forego any return on capital because they expect the dollar to rise in value.
You can buy into this as much as you want, but the trend of the past forty years says otherwise.