Damn those unconscionable savers, eh? And how would you classify negligible Treasury yields?
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Someone needs to ask Bernake this
- Thread starter Aaron Copland
- Start date
Quote from Thunderdog:
And how would you classify negligible Treasury yields?
I'm a perfect example.
I have 700k in Treasuries. I bitch and moan all the time about yield. The reality though is I'm not owed anything more than what I get. It's a market. Thus it is what it is. Low Treasury rates are a public good. For me to argue that taxpayers aren't paying me enough is self serving. If I don't like low yields then I should lend to someone more risky than the Treasury. It's a free country.
Quote from Thunderdog:
Evidently so. Bernanke is doing as he pleases.
Let's sit back and see how it plays out to utterly and completely discourage saving.
How does this "discourage" saving?
I know traders who're getting yields on corporates they haven't seen in years. This is a GREAT time to have cash.
Quote from Thunderdog:
I refer more to the time value of money than (corporate) risk premium.
You could just as easy talk about the time value of life. In the long run....
In a world without debt the value of cash is restricted to investment opportunity. To hoard and then complain about how little you receive in juice is a Shylock move.
I'm not sure that I follow. However, let us limit ourselves to the world that we live in; one that is burdened with unprecedented debt levels and that has precious few such hoarders you refer to. Unless the demographics have changed considerably since I last checked, the population in our two countries is aging. Do you really expect retired folks in the aggregate, many living on fixed incomes, to buy corporate debt? I'm guessing that those who do are not representative.Quote from Pa(b)st Prime:
You could just as easy talk about the time value of life. In the long run....
In a world without debt the value of cash is restricted to investment opportunity. To hoard and then complain about how little you receive in juice is a Shylock move.
Quote from Thunderdog:
I'm not sure that I follow. However, let us limit ourselves to the world that we live in; one that is burdened with unprecedented debt levels and that has precious few such hoarders you refer to. Unless the demographics have changed considerably since I last checked, the population in our two countries is aging. Do you really expect retired folks in the aggregate, many living on fixed incomes, to buy corporate debt? I'm guessing that those who do are not representative.
Are you a teenager T-Dog? Ever heard of telephone bonds? Or utilities? What do you think "retired folks" bought in the day's of yore prior to let's say 1980? Treasury debt is a relatively new product.
Apparently saving isn't a problem or else...voila rates would be higher. Just because lenders are shying away from instruments securitized by depreciating assets i.e. housing doesn't mean there's a lack of liquidity. Hell a few New York Yankees and Mets could take down an entire Treasury auction by themselves.
When you harp on older folks not getting enough yield you're only renforcing my point. High Treasury yields are an entitlement program for retired folks. It's pure wealth transferance. Workers pay taxes to service debt so that interest payments can subsidize lenders. It matters little if the lender to the Treasury is Toyota or if it's Joe Grandpa.
Fed policy doesn't "set" the long bond rate. The long end of the curve is market driven. Granted cheap at the window borrowing is an impetous for institutions to extend along the curve but with risk. In the early 1990's, bonds over 2's were often 400-500 basis points.
Admittedly, I don't know what I was thinking, or if I was thinking at all, when I wrote much of my last post. I had less that 4 hours of sleep last night, but that is hardly an excuse. So let me attempt to bow out with a smidgen of dignity by saying that the real "risk-free" rate ought not to be negative, as it presently is.Quote from Pa(b)st Prime:
Are you a teenager T-Dog? Ever heard of telephone bonds? Or utilities? What do you think "retired folks" bought in the day's of yore prior to let's say 1980? Treasury debt is a relatively new product...