How, exactly, will their sudden realization cause rates to skyrocket?
The exact mechanism is the lack of sustainable demand. The unsustainable demand comes mainly from episodes of worldwide deflation creating specific demand for dollars and carry trade unwinds creating relative demand for dollars in exchange for whatever other currency was previously speculated in. The dollar demand translates into treasury demand since those are easier to obtain. Plus, as I mentioned, the there are the foreign buyers that crop up mysteriously from time to time.
Obviously it is in the Fed's owners' and supporters' interests to keep interest rates low. They don't have to do much if the rate psychology stays low. Part of the rate psychology is the Toddsters of the world telling their respective forums that low rates are market magic and have nothing to do with the Fed.
So is the idea that the people who could cause rates to soar missed all the newspaper articles about the end of QE.
Part of the rate psychology is the Toddsters of the world telling their respective forums that low rates are market magic and have nothing to do with the Fed.
Yeah, I'm sure those guys are annoying. Any instances of them saying that on FR?
Plus, as I mentioned, the there are the foreign buyers that crop up mysteriously from time to time.
Yeah, hedge funds and rich guys are scary.