PDA

View Full Version : Huge inflation? Bond market yawns...



Soflasnapper
06-16-2011, 02:37 PM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> NEW YORK (Dow Jones)--The yield on benchmark 10-year notes broke below the pivotal 3.0% mark midday Wednesday, as Treasury prices rallied on weak U.S. data, reversing the last session's intense selloff. </div></div>

The Wall Street Journal article this summarizes and links to sits behind a subscription barrier, here. (http://online.wsj.com/article/BT-CO-20110615-709677.html)

But the bond market is the ultimate arbiter of when the US flood of money has become so great as to threaten worsening inflation.

The bond market would require a far greater yield whenever they decide that is about to take place, to provide them a cushion of real returns considering the inflation they can sense coming.

Yet they now will take UNDER 3% when they loan the government money for 10 years out? This means they do NOT see that kind of inflation looming.

LWW
06-16-2011, 04:30 PM
You conveniently overlook that the fed is artificially keeping rates so low by buying treasuries with fiat money.

It's a fool's paradise, and if the fed actually does cease the madness and not start with QE3 as a follow up to QE3 you will see the explosion in rates.

llotter
06-16-2011, 05:41 PM
The flight to 'safety' here from the Euro may keep this last hope going somewhat longer. Our plight is milder than Europe which begs the question, why we seem so dead set on moving further faster toward their economic model when we should be going in exactly the opposite direction?

cushioncrawler
06-16-2011, 06:08 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">You conveniently overlook that the fed is artificially keeping rates so low by buying treasuries with fiat money.....</div></div>How are they buying with fiat money?????
What sort of fiat money?????
If fiat, how else???????
Why iz fiat bad????
mac.

Sev
06-16-2011, 07:36 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: cushioncrawler</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">You conveniently overlook that the fed is artificially keeping rates so low by buying treasuries with fiat money.....</div></div>How are they buying with fiat money?????
What sort of fiat money?????
If fiat, how else???????
Why iz fiat bad????
mac. </div></div>

Because like unicorns and leprechauns it doesnt exist.

Soflasnapper
06-16-2011, 10:00 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">You conveniently overlook that the fed is artificially keeping rates so low by buying treasuries with fiat money.

It's a fool's paradise, and if the fed actually does cease the madness and not start with QE3 as a follow up to QE3 you will see the explosion in rates. </div></div>

What other kind of money is there now in this country, other than fiat money, since Nixon's Treasury Sec. John Connolly closed the gold window? Which was a very long time ago.

I suggest that if what you say is so, we'd have an inverted yield curve already, with the artificially lowered longer-term rates exceeded by the short-term rates (the Fed isn't buying T-bills and notes on the shorter maturity end, just bonds on the longer side).

Soflasnapper
06-16-2011, 10:01 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Sev</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: cushioncrawler</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">You conveniently overlook that the fed is artificially keeping rates so low by buying treasuries with fiat money.....</div></div>How are they buying with fiat money?????
What sort of fiat money?????
If fiat, how else???????
Why iz fiat bad????
mac. </div></div>

Because like unicorns and leprechauns it doesnt exist. </div></div>

It's the only money that exists in this country, since roughly '71.

cushioncrawler
06-16-2011, 10:11 PM
I am thinking that the Fed didnt uze money at all. Not even fiat.
But another question.
What if the Fed did uze non-fiat money or non-fiat something????
Would that be ok???? Would non-fiat be better than fiat????

I know the answer, and the answer iz that fiat and non-fiat are both bad. I kan explain.
mac.

cushioncrawler
06-16-2011, 10:23 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Sev</div><div class="ubbcode-body">....Because like unicorns and leprechauns it doesnt exist....</div></div>Sev -- Krappynomix 101. 12 Leprechauns buys 1 Unicorn.
mac.

Then again, legal tender at the Vatican inkloods....
Angels.
Saints.
Indulgences.
Miracles.
Heaven.
Gods.
But the Vatican haz shares in Fiat too.
mac.

LWW
06-17-2011, 12:05 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: cushioncrawler</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">You conveniently overlook that the fed is artificially keeping rates so low by buying treasuries with fiat money.....</div></div>How are they buying with fiat money?????
What sort of fiat money?????
If fiat, how else???????
Why iz fiat bad????
mac. </div></div>

Do you accept checks?

LWW
06-17-2011, 12:19 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Soflasnapper</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">You conveniently overlook that the fed is artificially keeping rates so low by buying treasuries with fiat money.

It's a fool's paradise, and if the fed actually does cease the madness and not start with QE3 as a follow up to QE3 you will see the explosion in rates. </div></div>

What other kind of money is there now in this country, other than fiat money, since Nixon's Treasury Sec. John Connolly closed the gold window? Which was a very long time ago.

I suggest that if what you say is so, we'd have an inverted yield curve already, with the artificially lowered longer-term rates exceeded by the short-term rates (the Fed isn't buying T-bills and notes on the shorter maturity end, just bonds on the longer side).

</div></div>

Are you saying again that QE2 doesn't exist?

And as to QE2 being used for long term bonds only ... that's where the TARP scam comes into play. The state gives the TARP cash to the banksters who then invest the money ... which cost them nothing ... into short terms securities at1% or so.

1 of $300B is $3B in free bankster profit. Wheb the bond is due, they send the money back to the banksters who repeat the process ... and we wonder why the banksters back dear leader.

It is a fascist banking system ... no matter how much you deny it.

cushioncrawler
06-17-2011, 02:31 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">...Do you accept checks?...</div></div>Kan the Fed write a cheque (banknote) without having the money??????. The cheque will bounce. I thort only the fedgov kood do that. But praps the Fed wont bounce their own banknotes, ie like ordinary banks dont.

If the Fed kan write banknotes without having the money, then praps that iz good, in which case i woz mistaken. That sort of fiat money iz good (good for theusofa ekonomy), ie fiat non-money.
mac.

Soflasnapper
06-17-2011, 02:40 PM
ALL banks can write checks without having the money.

Rather, they electronically credit a money value into an account, and they can typically have 10- to 20-times the amount of 'created' money this way relative to what their deposits total up to.

The multiplier is the reciprocal of the reserve requirement. If there's a 10% reserve requirement, they can issue up to 10x the money they have in 'loan' monies. If it's a 5% reserve, then 20x.

There have even been some borrowers that won against having to repay the bank, using the defense that the banks never actually gave them any money from reserves.

Soflasnapper
06-17-2011, 02:47 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Soflasnapper</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">You conveniently overlook that the fed is artificially keeping rates so low by buying treasuries with fiat money.

It's a fool's paradise, and if the fed actually does cease the madness and not start with QE3 as a follow up to QE3 you will see the explosion in rates. </div></div>

What other kind of money is there now in this country, other than fiat money, since Nixon's Treasury Sec. John Connolly closed the gold window? Which was a very long time ago.

I suggest that if what you say is so, we'd have an inverted yield curve already, with the artificially lowered longer-term rates exceeded by the short-term rates (the Fed isn't buying T-bills and notes on the shorter maturity end, just bonds on the longer side).

</div></div>

Are you saying again that QE2 doesn't exist?

And as to QE2 being used for long term bonds only ... that's where the TARP scam comes into play. The state gives the TARP cash to the banksters who then invest the money ... which cost them nothing ... into short terms securities at1% or so.

1 of $300B is $3B in free bankster profit. Wheb the bond is due, they send the money back to the banksters who repeat the process ... and we wonder why the banksters back dear leader.

It is a fascist banking system ... no matter how much you deny it. </div></div>

I know the banking system is a rigged and phony game. I hold no brief for our system, but there is little new to this kind of thing.

As for TARP, that's ended. Of the what... $750 billions or so authorized... half was never issued (meaning about $375 billion was the total issued), and based on the possibility that executive pay and bonuses would be reined in, all the parties paid under TARP paid it back, except for the remaining amount that went to AIG.

AIG was not a bank, and did NOT have the ability to turn this into free money, nor did it keep the money (it was used to pay back the counter-parties that had taken out insurance with AIG against the failure of the CDOs). This amount outstanding for AIG is about $40 billion, a small fraction of the TARP authorization and a not so large fraction of the TARP loans actually made.

cushioncrawler
06-17-2011, 03:27 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Soflasnapper</div><div class="ubbcode-body">ALL banks can write checks without having the money.

Rather, they electronically credit a money value into an account, and they can typically have 10- to 20-times the amount of 'created' money this way relative to what their deposits total up to.

The multiplier is the reciprocal of the reserve requirement. If there's a 10% reserve requirement, they can issue up to 10x the money they have in 'loan' monies. If it's a 5% reserve, then 20x.

There have even been some borrowers that won against having to repay the bank, using the defense that the banks never actually gave them any money from reserves.</div></div>Yes of course the Fed requirement, that no banks worry about. This ignorance of the requirement iz probly why theusofa iz going az well az it iz, and why theusofa haz historically gone az well az it didded. If banks were honest then the usofa might be much the poorer.

But that bizness about not paying back, thats funny. But of course they spent someone's money, didnday.
mac.

So, if they didn paydemoneyback, whyduztheusofagovhavtapay???????
Thats what i allways say, why duz theusofa havta payback something that it never got or had.

LWW
06-18-2011, 05:50 AM
THIS (http://www.huffingtonpost.com/2009/11/16/aig-bailout-government-ov_n_359919.html) from the reich wing Huffington Post:

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">A brutal report issued Monday by a government watchdog holds Tim<span style='font-size: 11pt'>[/size]othy Geithner -- then the head of the Federal Reserve Bank of New York and now the nation's Treasury Secretary -- responsible for [size:11pt]overpayments that put billions of extra tax dollars in the coffers of major Wall Street firms,</span> <span style='font-size: 14pt'>most notably Goldman Sachs.</span> ...

Instead of bargaining with AIG's numerous counterparties to resolve its billions of dollars in souring derivatives contracts, <span style='font-size: 11pt'>Geithner's team ended up paying top dollar for toxic assets -- </span><span style='font-size: 14pt'>"an amount far above their market value at the time," the report notes.

"There is no question that the effect of FRBNY's decisions -- indeed, the very design of the federal assistance to AIG -- was that tens of billions of dollars of Government money was funneled inexorably and directly to AIG's counterparties,"</span> <span style='font-size: 11pt'>the Office of the Special Inspector General for the Troubled Asset Relief Program said.
</span>
<span style='font-size: 14pt'>Wall Street firms like Goldman Sachs,</span><span style='font-size: 11pt'> Merrill Lynch and Wachovia got full value for their derivatives contracts with AIG,</span> <span style='font-size: 14pt'>and taxpayers got the bill. In total, $27.1 billion of public money was transferred to companies that did business with AIG.[</span>/b] ...

Geithner, now the nation's chief financial officer, just didn't bargain hard enough with Wall Street's biggest companies, the report concludes:

<span style='font-size: 11pt'>[b][T]he refusal of FRBNY and the Federal Reserve to use their considerable leverage as the primary regulators for several of the counterparties, including the emphasis that their participation in the negotiations was purely "voluntary," made the possibility of obtaining concessions from those counterparties extremely remote. While there can be no doubt that a regulators' inherent leverage over a regulated entity must be used appropriately, and could in certain circumstances be abused, in other instances in this financial crisis regulators (including the Federal Reserve) have used overtly coercive language to convince financial institutions to take or forego certain actions. As SIGTARP reported in its audit of the initial Capital Purchase Program investments, for example, Treasury and the Federal Reserve were fully prepared to use their leverage as regulators to compel the nine largest financial institutions (including some of AIG's counterparties) to accept $125 billion of TARP funding and to pressure Bank of America to conclude its merger with Merrill Lynch. Similarly, it has been widely reported that the Government, while arguably acting on behalf of General Motors and Chrysler, took an active role in negotiating substantial concessions from the creditors of those companies.</span> ...

</div></div> THIS (http://www.huffingtonpost.com/2009/11/16/aig-bailout-government-ov_n_359919.html) THIS (http://pageten-jds.blogspot.com/2009/12/tarp-limbaugh-says-it-is-slush-fund.html)