Texas>home of GW Bush, Dick Armey, Tom Delay, Phil Gramm
Re: What is ahead for Government Bonds?
Originally Posted by c1ue
The problem with those pointing to Japan as an example of what will happen is that they rarely also look at the Japanese macroeconomic model post-bubble.
As iTulip and others (including myself) have pointed out, Japan was able to control its interest rates because the government was able to use exports to offset a weak yen in paying for imports - and this was because Japan essentially borrows from its own people in its own currency.
The US has been able to borrow from others using its own currency, but continues to need more and more other people's money due to both the private and public overspending. In the short term, the maneuvering within the subsidized US banks can (and has) kept Treasury rates low, but the turning point is getting ever closer: where the need for foreign money (i.e. stable dollar) is conflicting with the ability for the US economy to grow (i.e. actual lending from banks).
I think we're starting to see this now: where foreign lending is falling yet Treasury rates are still low because the subsidized US banks/Fed/Treasury is starving the rest of the economy of credit by building a perpetual motion machine of Fed loans to banks -> banks buying Treasuries -> Government deficit spending.
Where this perpetual motion machine breaks down is as the economy continues to slide - then confidence in the dollar falls irregardless of Treasury rates leading into the iTulip dollar devaluation derived inflation.
The unanswerable question is "when?" One can be as "right as rain" (a senseless expression) and until the "right" becomes reality, one can lose one's ass in markets.
Of lesser importance is regarding "irregardless."
irregardless nonstandard : REGARDLESS
usage Irregardless originated in dialectal American speech in the early 20th century. Its fairly widespread use in speech called it to the attention of usage commentators as early as 1927. The most frequently repeated remark about it is that *there is no such word.* There is such a word, however. It is still used primarily in speech, although it can be found from time to time in edited prose. Its reputation has not risen over the years, and it is still a long way from general acceptance. Use regardless instead.
Jim 69 y/o
"...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)
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