Posted on 07/05/2009 8:42:14 PM PDT by fiscon1
More than one reader has emailed me asking me how bonds work and why I am so concerned about what Obama's policies will do to them and the economy with them. I think it's time for a wonky economics lesson for all the laymen out there on how bonds work.
First, it's important to know that U.S. Treasury bonds are traded on an exchange, the Chicago Board of Trade, much like any other investment. As such, they work like any other investment in any market. It's ultimately determined by supply and demand. If there are more buyers than sellers the value of bonds goes up and vice versa.
(Excerpt) Read more at theeprovocateur.blogspot.com ...
I switched to 80% bonds last year, is it time to get back in the game?
Get back into stocks? No way.
Note he mentions Chicago Board of Trade (CBOT). Also the CBOE, and also CME and the cap and trade exchange ALL in Chicago - where all of our future’s and our country was stolen last fall/summer.
Can I make 100 grand overnight on cattle?
So in otherwords, we are about to witness inflation. ONe way or another it’s coming. Either right away, or down the road a little bit.
Is that about the size of it?
I don’t understand why gold and silver are not going up.
Either that, or we face higher interest rates or higher taxes.
I don’t follow gold and silver though I think they have been going up.
Not recently they havn’t. Silver actually went down last week.
Only if your name is Hillary.
Deflation is winning. While people focus on the 1 or 2 trillion that the gov’t and the Fed are adding they don’t see the tens of trillions disappearing due to massive debt default. This isn’t a typical recession.
[Deflation is winning. While people focus on the 1 or 2 trillion that the gov’t and the Fed are adding they don’t see the tens of trillions disappearing due to massive debt default. This isn’t a typical recession.]
Karl Denninger is one of the best explaining that view. Peter Schiff is best on the hyperinflation track. I think they both may be right, we are screwed in multiple directions at the same time.
You can’t spend your way out of debt.
That bears repeating. And thank you for the clarifying this much talked-about but little understood phenomena. I was trying to explain this at lunch today and it took a long time. Now I can do it with three sentences.
Roubini’s latest combines the two views in a fashion:
“For the time being, of course, there are massive deflationary pressures in the economy: the slack in the goods markets, with demand falling relative to supply-and-excess capacity. The rising slack in labor markets, which are controlling wages and labor costs and pushing them down, implies that deflationary pressures are going to be dominant this year and next year.
But eventually, large budget deficits and their monetization are going to lead – towards the end of next year and in 2011 – to an increase in expected inflation that may lead to a further increase in ten-year treasuries and other long-term government bond yields, and thus mortgage and private-market rates. Together with higher oil prices driven up in part by this wall of liquidity rather than fundamentals alone, this could be a double whammy that could push the economy into a double-dip or W-shaped recession by late 2010 or 2011. So the outlook for the US and global economy remains extremely weak ahead. The recent rally in global equities, commodities and credit may soon fizzle out as an onslaught of worse- than-expected macro, earnings and financial news take a toll on this rally, which has gotten way ahead of improvement in actual macro data.”
http://www.rgemonitor.com/roubini-monitor
How good are you at rustling?
I’d be buying metals and mining stocks right now if I was 80% in bonds. I’d be running and screaming from the bond market.
Gold and silver are manipulated by Goldman, JP Morgan and Deutsche Bank at the behest of the global banking cartel. Check out http://gata.org/
ha you beat me to it!
That depends on what you choose to look at. Real estate and consumer crap from Wal Mart is deflating, while commodities and food are starting to inflate. Weird times.
BFLR
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