T-Bond yields will be low for years, even if the Fed has to buy 99% of each auction?

[Random.Capital]

Quote from S2007S:

Do you honestly think rates can stay this low forever, not possible.

It's possible to do it for 20 years, at least, and in financial markets that's pretty darn close to "forever".

 

[drsteph]

Quote from jem:

I can confirm that.

Personal experience? :eek:

Full disclosure : Have lost small on structural short long bond position earlier last decade.

 

[dumb_mother]

http://dailyreckoning.com/mandatory...ason-to-be-concerned-about-your-ira-and-401k/

foreign financing isn't an issue if we follow argentina

 

[crgarcia]

Quote from TrueRange:

The Chinese can smoke the fed out with one sale.

The Fed can buy for cheap the whole chinese bond holding, if they want to.

Maybe that's the idea?
Wait, this is starting to sound like a conspiration theory

 

[crgarcia]

Quote from dumb_mother:

http://dailyreckoning.com/mandatory...ason-to-be-concerned-about-your-ira-and-401k/

foreign financing isn't an issue if we follow argentina

Argentina has most of its foreign debt in a foreign currency (the US dollar).

America has its debt in its own currency (by the way the currency all oil is traded with), so America can repay with devalued dollars.

Of course the major US "creditor" will be the Fed, which is part of the US gov't, so there's no point in devaluing the US dollar.

 

[Debaser82]

Faber: That is why we are all doomed. The deficit will be above a trillion dollars a year as far as the eye can see. One day, Mr. Bernanke or whoever is at the Fed will have to increase short-term interest rates. When that happens, America's interest burden will go up dramatically. Interest payments could go to 35% of tax revenue in 10 years' time, but that is an optimistic assumption. I'm inclined to think 50% of tax revenue will go toward interest payments on government debt in 10 years. Then you are bankrupt. There is only one way out -- the Zimbabwe way. You will have to print and print and print.

http://online.barrons.com/article/SB126359778174330009.html#articleTabs_panel_article=1

 

[TimeCorrosion]

Quote from crgarcia:

Argentina has most of its foreign debt in a foreign currency (the US dollar).

America has its debt in its own currency (by the way the currency all oil is traded with), so America can repay with devalued dollars.

Of course the major US "creditor" will be the Fed, which is part of the US gov't, so there's no point in devaluing the US dollar.

You think "Fed is part of US govt?" Wake up, America !!!

 

[R1234]

Look at Japan. Their JGB (10 year note) yield has never gone much above 2% in the past decade. And I do see similarities between Japan's past 2 decades and where the US is headed.

 

[efficiency]

Quote from Debaser82:

Faber: That is why we are all doomed. The deficit will be above a trillion dollars a year as far as the eye can see. One day, Mr. Bernanke or whoever is at the Fed will have to increase short-term interest rates. When that happens, America's interest burden will go up dramatically. Interest payments could go to 35% of tax revenue in 10 years' time, but that is an optimistic assumption. I'm inclined to think 50% of tax revenue will go toward interest payments on government debt in 10 years. Then you are bankrupt. There is only one way out -- the Zimbabwe way. You will have to print and print and print.

http://online.barrons.com/article/SB126359778174330009.html#articleTabs_panel_article=1

Compound interest is considered by some as the eighth wonder of the world. Of course I consider cgarcia's half-cocked posts instead.

The notion that we can continue to borrow 30 years out and re-pay (utopian) in inflation-ravaged dollars is ambitious. The notion that the US borrows from itself via buying T-bonds is.........
Kinda of a masterbation.


Nixon is known for the Watergate break in. A yawn. His true damage occured in August 1971, when he implemented the wage-price freeze and .........reneging on Bretton Woods. $35 dollar gold became $850 gold in 9 years.

Since then a dollar bill is worth a dollar as long as you believe it is

 

[crgarcia]

Quote from efficiency:

The notion that we can continue to borrow 30 years out and re-pay (utopian) in inflation-ravaged dollars is ambitious. The notion that the US borrows from itself via buying T-bonds is.........
Kinda of a masterbation.

Quote from Debaser82:

Faber: That is why we are all doomed. The deficit will be above a trillion dollars a year as far as the eye can see. One day, Mr. Bernanke or whoever is at the Fed will have to increase short-term interest rates. When that happens, America's interest burden will go up dramatically. Interest payments could go to 35% of tax revenue in 10 years' time, but that is an optimistic assumption. I'm inclined to think 50% of tax revenue will go toward interest payments on government debt in 10 years. Then you are bankrupt. There is only one way out -- the Zimbabwe way. You will have to print and print and print.

http://online.barrons.com/article/SB126359778174330009.html#articleTabs_panel_article=1

The Fed changed the game

America no longer needs to borrow from anyone to finance the deficit.

The Fed can just print money to "buy" T-Bonds
Nobody wants to buy T-Bonds at the low yields offered?

No problem, the Fed can buy 99%, or 100% of the T-Bond auctions.
They are already buying about 50% of the auctions.