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To: Toddsterpatriot
I acknowledged the inflation, not trying to counteract it, just soften the blow on savers. Inflating and giving away money is never good, but it is a quick way to deal with an overleveraged situation.

Is he popping it too quickly or too slowly or just right? And IIRC, he said he'd buy 10 years to keep the yield down, but the yields are rising. How can that be?

Market rates on 10 years should reflect expected inflation within 10 years plus risk of default whether partial or full. The US is lurching into socialism raising the risk of default due to reduced economic activity. The risk of inflation within 10 years is extremely high due to the QE itself because QE is inflationary. The fact that the current QE is failing to keep rates down is a sign that more QE (inflation) will be needed.

If inflation is inevitable it is simply better to get it over with because the anticipation of inflation causes serious market excesses (e.g. last year's oil bubble) that are far worse for the economy than the one time hit.

But the Fed was buying as yields were rising.

That's the way markets work, the sellers at that point in time were throwing in the towel believing that the Fed was doing its last purchase. But then the market levels off or stutters, the credit market tightens, things look a little more dicey; so then the speculators pile back into the 10 years knowing that the Fed will soon be back.

103 posted on 07/29/2009 8:26:55 AM PDT by palmer (Cooperating with Obama = helping him extend the depression and implement socialism.)
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To: palmer
Market rates on 10 years should reflect expected inflation within 10 years plus risk of default whether partial or full.

So Bernanke doesn't have absolute power over 10 year yields? Good to know.

That's the way markets work, the sellers at that point in time were throwing in the towel believing that the Fed was doing its last purchase.

Bernanke announcing he'd buy 10 years to keep the yield down was a signal the Fed stopped purchasing?

I think we've discovered that just because the Fed tries to do something doesn't mean they'll be successful.

104 posted on 07/29/2009 8:35:45 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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