Only a MARKET CRASH can save the Fed’s plan?
Reduced genuine fascination rates need very low yield on bonds. As foreign customers dry up, who will purchase the bonds?….. possibly the Fed desires to scare dollars out of stocks and into the ‘safe haven’ of bonds to shore up their prepare to reanimate the crushed client economic system. A increasing stock marketplace would draw hard cash away from bonds and place strain on fascination rates just as the financial system is flat-lining. What would YOU do to hold the dollars flowing into bonds at pathetic reduced yields? TLT (20 year Treasury fund chart) finance.yahoo.com Investigation on Bonds and Bond Yield curve www.investopedia.com Exceptional explanation of Bonds and how they influence fascination costs useconomy.about.com Post on China shifting their bonds to shorter expression… www.tehrantimes.com
Video Rating: 4 / 5
There are two circumstances that will affect the demand for bonds. The first has to do with expected interest rates. If interest rates are expected to rise, bond prices are expected to fall. Falling bond prices represent a decrease in demand for bonds. Since interest rates are so low right now (and expected to go higher in the future), demand for bonds is weaker than it could be. The second circumstance has to do with, as you were saying, scaring us into bonds, a.k.a. “flight to quality”.
STOP paying your debt, (we) the people do have the power: just stop paying (and playing their game). It would be interesting to see who’s got who by the balls, it’s all just a little scammed poker game,
isn’t it?
Hi Suzette.
I think you have explained why the video now seems ‘premature’ in its timing, even though valid in its content. Thanks.
Monetizing debt to support bonds and keep interest rates low can clearly carry on for much longer than one imagines.
Japan is a good example of just how long a bond market can be propped up.
Thanks.
Hi ‘Someday’.
You are being kind to say that the vid is “a tad premature”. Thanks for that.
I agree with your comments regarding the market, by the way.
Cheers.
Good video. I did Not understand the basics of the US Bond market.
It is now 19th March 2010 and your video is a tad premature.
But markets crash/long term down move may still happen as the financial crisis in the USA worsens, rather than improves,
and the US govt. needs funds.
As at 19 March 2010 the US housing crisis is getting worse and it looks like the Major Markets have finally peaked and are ready to tank, thus driving speculation capital into Treasury bonds.
Hi Bellybroom.
Almost one year on now and the stock market rally has, so far, continued.
I note that your comment was made 9 months ago. Good call.
There is a flaw with your analysis. The Fed can print as much money as it wants and/or monetize the debt. They can do both, keep interest rates low & “buy” bonds. Hence the rally.
Nice work. keep it up. mean time come for social media marketing for esteembpo**com
good video. but i dont believe investors are looking for safe havens at this point. more and more will be drawn back to the stock markets as profits start to return- and some sense of normality i.e. regular rally`s. the yanks are stuck with their debt- if i`m right, then what happens to bond yields and the dollar??
Yes, China has been buying up mining companies as well as agriculture interests in places like Brazil. China is also mining more and more of it’s own gold. Look for a world currency in the coming years and a total collapse of the U.S. dollar.
I think all may even be documented.
But same goes here. As a trader I’m mostly interested in the influance of inflation speculation ruling the markets. Fair or intrinsic value vs marketpeak price. The market peak goldprices back in the eighties still have not been reached in real terms. Many people back then actually thought and feared prices would rise even further, allthough there was no mathematical explanation for that. Thanx for your posts. ! Thomas
Ditto. Thank you.
Cheers.
I’m working on a video about gold at the moment, but looking for a new twist to make it interesting as the subject of ‘gold vs inflation’ is well documented.
I guess we’ll have a discussion about that too.
thanks for keeping me thinking for an hour lol.
……. thistime wordwide. With no (strong enough) external forces to help postpone the inevitable. Which is exactly. Well that still depends I think. but the mentioned mobile private capital will, at some point in the next 3 to 5 years, rapidly leave the bondmarkets, fleeing into hard stuff. Land, commodities, precious metals first.
I see no way “they” can prevent that by any means. But we are virtually all in it togeter. and thats “different this time”.
But concering your original point. I agree that the bondmarket is critical. It’s just that “allowing” the stockmarket to fall in favore of the bondmarket, will strenthen the deleveraging cycle. it destroys private balance sheets further. No I think they will print it. For a large part. The bondmarkets worldwide currently are considered “the last savehavens”. So mobile investors are flocking. Savings will (are) soar(ing) further, looking for that safety. Japan scenario. more or less
Your right from a mathematical point of view. But the timing and chronology of things can differ in financial markets. For instance, the dollar does not always rise on the day the FED raises Interest rates. Perhaps competitors raised more. Or perhaps investors expected more. Simular sentiments can rule the bondmarkets.
I’ts very difficult for the dollar to collapse if most of its competitors ar simularly destroying their currencies.
Collapse against what then?
BINGO! – I totally agree, and you put it nicely into a brief post. Many thanks.
Hard to see how a collapse caused by too much debt can be solved by… stimulating more debt.