Tripple A for US treasuries no more?

[Tulpen]

Do you consider it a possibility the tripple A status for US treasuries is on the line?

http://www.ft.com/cms/s/0/40f3a2be-bfa9-11dc-8052-0000779fd2ac.html?nclick_check=1

[grapejelly]

the default risk of the US treasuries is 0% nominally, and 100% real.

[Starving Steve]

the default risk of the US treasuries is 0% nominally, and 100% real.

$900 Feb gold to-day sure speaks volumes about the long-term worth of US Treasuries.

But higher taxes might solve the US federal debt problem. And cutting military spending and drug war spending would also help.

To start, Congress should pass a VAT tax or GST in the U.S.

A new Federal Reserve Board (with a new Fed chairman) might also help--- a board and chairman which would do the exact opposite of what the present Fed Board is doing. The Fed should be raising interest rates, definitely not lowering interest rates.

In other words, a move to national austerity in the U.S. is now in order. In plain street English, it means: "Tightening your belt and sucking it in."

But the chance of national austerity happening in the US is next to nil, so we have $900 gold instead. [Sic,] "Inflate or die."

[metalman]

the default risk of the US treasuries is 0% nominally, and 100% real.

can i steal that? brilliant.

i like this one from over on the tickerforum...

"The USA can remain insolvent longer than the asian countries that support it."

[grapejelly]

the best quote ever from Greenspan:

can't find it...something about the US has the resources to pay all obligations in the future...we just cannot warrant what those payments will be worth...maybe someone can help me with this one?

[Starving Steve]

the best quote ever from Greenspan:

can't find it...something about the US has the resources to pay all obligations in the future...we just cannot warrant what those payments will be worth...maybe someone can help me with this one?

The cavalier attitude of the Fed chairman stands-out here. It is an attitude that I would expect to find in the central bank of a banana republic, not in the Federal Reserve Bank of the U.S.

[WDCRob]

“We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power.”

[Starving Steve]

“We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power.”

The paramount duty of a central bank is TO PROTECT THE VALUE OF ITS CURRENCY. If Greenspan was not clear about that key point, then he should have not been at the Fed.

But the problem at the Fed was not just the incompetent leadership from Greenspan but also the dovish (inflationist) appointees to the FOMC made in recent years by Bush. Unfortunately, these pro-growth (inflationist) appointments were confirmed by the Republican-controlled US Senate.

[grapejelly]

“We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power.”

Thank you!

[dbarberic]

The paramount duty of a central bank is TO PROTECT THE VALUE OF ITS CURRENCY. If Greenspan was not clear about that key point, then he should have not been at the Fed.
Wrong. That is what most people assume the role of the central bank is.Central banks are designed for only two reasons: 1) Provide the ability for their government sponsors to run budget deficits (wage unnecessary wars, promise entitlement programs that ensure re-election, etc.)2) Mechanism to ensure banking profits through moral hazard (e.g. take on maximum risk, privatize profits, socialize losses through inflation).Central banks have only the interest in protecting the value of currency to the extent that if the currency is devaluated to quickly, the central bank may loose its government’s sponsorship.Recommended reading: Creature from Jekyll Island.http://www.realityzone.com/creature.htmlInterview with the author on Financial Sense:http://www.financialsense.com/Experts/2006/Griffin.html

[GRG55]

The paramount duty of a central bank is TO PROTECT THE VALUE OF ITS CURRENCY. If Greenspan was not clear about that key point, then he should have not been at the Fed.

But the problem at the Fed was not just the incompetent leadership from Greenspan but also the dovish (inflationist) appointees to the FOMC made in recent years by Bush. Unfortunately, these pro-growth (inflationist) appointments were confirmed by the Republican-controlled US Senate.

It's not the Central Bank (in this case the Fed) that continues to expand entitlement programs. That is the point that Greenspan was trying to make responding to Rhode Island Senator Jack Reed, and his colleagues, with these words.

[Starving Steve]

It's not the Central Bank (in this case the Fed) that continues to expand entitlement programs. That is the point that Greenspan was trying to make responding to Rhode Island Senator Jack Reed, and his colleagues, with these words.

No, it was not the Fed that was speculating on homes, nor building a nation in Iraq, nor introducing Pharicare into Medicare, nor creating exotic mortgages and derivatives. But it was the Greenspan Fed that facilitated these speculations with 1% interest rates--- for four long years, no less.

[Starving Steve]

No, it was not the Fed that was speculating on homes, nor building a nation in Iraq, nor introducing Pharicare into Medicare, nor creating exotic mortgages and derivatives. But it was the Greenspan Fed that facilitated these speculations with 1% interest rates--- for four long years, no less.

Economist Anna Schwartz in an interview with Ambrose Evans-Pritchard said to-day in The Sunday Telegraph that the Fed is itself the chief cause of the credit bubble, and that the Fed seems stunned as the consequences of its own actions [ 1% money and an eyes-closed policy ] engulf the financial system.

"The new group at the Fed," she says, "is not equal to the problem that faces it." She continues, "They need to speak frankly to the market and acknowledge how bad the problems are, and acknowledge their own failures in letting this happen. This is what is needed to restore confidence."

And she continues, "There would never have been a sub-prime crisis if the Fed had been alert. This is something Greenspan must answer for."

[Jim Nickerson]

Economist Anna Schwartz in an interview with Ambrose Evans-Pritchard said to-day in The Sunday Telegraph that the Fed is itself the chief cause of the credit bubble, and that the Fed seems stunned as the consequences of its own actions [ 1% money and an eyes-closed policy ] engulf the financial system.

"The new group at the Fed," she says, "is not equal to the problem that faces it." She continues, "They need to speak frankly to the market and acknowledge how bad the problems are, and acknowledge their own failures in letting this happen. This is what is needed to restore confidence."

And she continues, "There would never have been a sub-prime crisis if the Fed had been alert. This is something Greenspan must answer for."

Do you mind putting up the link to the Financial Times?

[Lukester]

Do you mind putting up the link to the Financial Times?

Jim -

As it seems your entire pastime is spending hours reading iTulip and other blogs, how about hoisting your typing hand far enough up onto the keyboard to type (or copy paste) this text into a Google search window?

<< Anna Schwartz, Fed is itself the chief cause of the credit bubble >>

Yeesh! [ Would you like us to serve you up breakfast in bed too? Coffe or Tea Sir? How do you like your toast Sir? Eggs? ]

[Jim Nickerson]

Jim -

As it seems your entire pastime is spending hours reading iTulip and other blogs, how about hoisting your typing hand far enough up onto the keyboard to type (or copy paste) this text into a Google search window?

<< Anna Schwartz, Fed is itself the chief cause of the credit bubble >>

Yeesh! [ Would you like us to serve you up breakfast in bed too? Coffe or Tea Sir? How do you like your toast Sir? Eggs? ]


Get over it.

[Starving Steve]

Get over it.

I am not Jim. I am Starving Steve. But as a good scribe, here is the link to the Anna Schwartz story in the Sunday Telegraph:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/01/13/ccschwartz113.xml

[Jim Nickerson]

I am not Jim. I am Starving Steve. But as a good scribe, here is the link to the Anna Schwartz story in the Sunday Telegraph:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/01/13/ccschwartz113.xml


Thank you, Steve, and hope you are not starving. Even being the internet idiot I am, I could spend time searching for the original article you referenced without your having remembered to put in the link, and everybody else too who may be interested could also spend their time looking it up. To me it is real kindness and often times supportive to one's post to put in applicable links.

Thank you again for any trouble to do it.

[Jim Nickerson]

Steve, that is a good article and worthwhile reading. Thanks for bringing it to attention.

[GRG55]

No, it was not the Fed that was speculating on homes, nor building a nation in Iraq, nor introducing Pharicare into Medicare, nor creating exotic mortgages and derivatives. But it was the Greenspan Fed that facilitated these speculations with 1% interest rates--- for four long years, no less.

Point taken Steve. But in the case of entitlement programs, specifically, I fail to see the link with 1% interest rates. Fed rates (or in my home country case, Bank of Canada rates) well above 1% have never detered our politicians from expanding entitlements, and charging the result to future generations of taxpayers.

The period of 1% effective Fed funds rate from July 2003 to June 2004 (see the table in the link below) was substantially less than 4 years...


http://research.stlouisfed.org/fred2/data/FEDFUNDS.txt

[Starving Steve]

Point taken Steve. But in the case of entitlement programs, specifically, I fail to see the link with 1% interest rates. Fed rates (or in my home country case, Bank of Canada rates) well above 1% have never detered our politicians from expanding entitlements, and charging the result to future generations of taxpayers.

The period of 1% effective Fed funds rate from July 2003 to June 2004 (see the table in the link below) was substantially less than 4 years...


http://research.stlouisfed.org/fred2/data/FEDFUNDS.txt

Just looking at the actual Fed Funds rate intended by the Fed, as compiled by the Federal Reserve Bank of New York, the rate lingered below 2% ( in the 1% numbers ) from the December 2001 until November 2004, a period of about 3 years. So, with some wiggle-room, I stand by my statement.

Hence, the Greenspan Fed kept ( and intended to keep ) nominal interest rates in the ONES for THREE LONG YEARS. Their folly is why we have the real estate mess, the derivatives mess, the creative and toxic-mortgage mess, and all of the other messes that Greenspan made.

Being a senior citizen, I remember being burned (as a saver and bond investor) by U.S. Federal Reserve policy back in the 1970s. After that miserable experience, I was given the impression by Paul Volker that the Fed would never again return to its old inflationary ways. But now, the same inflation experience is being played-out again by the Fed keeping interest rates far too low for far too long.

The impression that I am left with is that Federal Reserve policy is nothing but a war against savers.

[Verrocchio]

The impression that I am left with is that Federal Reserve policy is nothing but a war against savers.

Your impression is valid, but you're really not a target; more like collateral damage.