Investors Buy U.S. Debt at Zero Yield

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Investors Buy U.S. Debt at Zero Yield

The news sent a sobering signal: in these troubled economic times, when people have lost vast amounts on stocks, bonds and real estate, making an investment that offers security but no gain is tantamount to coming out ahead. This extremely cautious approach reflects concerns that a global recession could deepen next year, and continue to jeopardize all types of investments.

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Funny, the Oz reserve bank broke out today, offering that they "may" have a meeting in Jan (which they don't ever), and review interest rates...and they "may" drop them another percent or so.

IMO, the fact that they are offering these as "safe positions" means that the fix is in and the zero interest "safe" accounts will provide the cash for the geared reinvestment, while the cows cower after having been flogged with joining the "growth" crowd.

Whether the upturn is extended or short means not a great deal. Money has been made on the way up, the way down, and on the up and downs.

Another up with someone else's money is always to be applauded.
 
Originally Posted By: Gary Allan
Investors Buy U.S. Debt at Zero Yield

The news sent a sobering signal: in these troubled economic times, when people have lost vast amounts on stocks, bonds and real estate, making an investment that offers security but no gain is tantamount to coming out ahead. This extremely cautious approach reflects concerns that a global recession could deepen next year, and continue to jeopardize all types of investments.

NY Times - registration required to read full text


The other factors are:

1. People anticipate short term deflation. So even at zero yield, your purchasing power is increasing. But this is a risky bet too because the FED is pumping so much cash into the system that at some point we will see inflation again. The real question is when? I suspect after the hedge funds finish their deleveraging and fire sales of assets.

2. People don't trust that banks will not go belly up. FDIC is offering less and less security as the Treasury continues to rack up obligations. But historically, the treasury has made sure that direct investors in its debt got their money back before paying off other obligations (such as FDIC insurance).
 
It's the beginning of a new order mandating "economic fairness".

The investors don't want to be negatively labeled in this new definition of fairness whereas if you make money in a down economy you're a blood sucker guilty of high crimes against humanity.

So, let's burn our paychecks to ring in the new system and show solidarity with those who've lost their jobs. For those who've lost their homes to foreclosure, it is your duty to default on yours and guarantee the greedy bankers can't get theirs by liquidating all your accounts and making a bonfire with the paper you withdraw.

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Originally Posted By: VeeDubb


1. People anticipate short term deflation. So even at zero yield, your purchasing power is increasing.


VeeDub - you continue to amaze me with your astuteness. You are a pretty sharp guy. That is exactly is what is going on. And exactly what most of the new dealers and their cronies missed for so many years in the 1930's - they simply couldn't, didn't know how or whatever to reverse a deflationary situation. The markets are forward looking. Ms. Head Vagary sees lots of uncertainty ranging from things that stop growth to things that stunt growth. Including that ancient street walker, Ms. Taxe Hike. Money guys aren't falling for the gov makes more brothels with teller machines and we shall all flourish line. I just wish I had put a little more in gov debt investments!!
 
Being consistent with Gary's 'economic theories' whereas anyone making positive gains in a down economy is a LAG (euphemism for leech or blood sucker) on the system, how could you possibly deserve anything other than a loss in these times?
 
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Originally Posted By: Gary Allan
Investors Buy U.S. Debt at Zero Yield


Those who buy US debt now at any yield are not investors, but either kamikazes, or potential criminals, or simply idiots.
 
Originally Posted By: oilyriser
Currency should have zero yield, on average. It's supposed to be just a medium of exchange and not a growth investment.


You mean negative yield after inflation, and risk with no yield before inflation?
 
Under oilyriser's system, there is no inflation.

You only need inflation to feed a debt based money system, where the system has to run ever faster to avoid catching it's tail.
 
Originally Posted By: digitalSniperX1
Being consistent with Gary's 'economic theories' whereas anyone making positive gains in a down economy is a LAG (euphemism for leech or blood sucker) on the system, how could you possibly deserve anything other than a loss in these times?


Not necessarily so ..but given the major "economic fads" ...it's like a lottery where, like most, the least capable end up with the most costs and damage.

Some think that this is a good thing, but not necessarily in those terms. That is, the most savvy and capable do deserve the best and the most, but may be lowlifes and vampires in the modalities that they acquire wealth.

There is no creation of wealth if there is a net loss. Now if you show me how you actually did some good and were a true gainful producer in the midst of the milking ..personally made more people better off then you drained in assets in the process ..then that would be worth more examination.

Would you do something immoral or purposely harm a mass of fellow humans for gain? Would you proudly proclaimed that your bounty and gain is the product of others suffering and that you're delighted to see their demise since it was the principle enabler to your elevation (this is a question for everyone except Tempest. I know his answer
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)?

While I don't seriously think that you'll say anything like that, it would be very hard to deny that (and this assumes that you came out of this well and aren't truly just another victim in the shakedown) the instrument of your gain was corrupt.. and had assured loss and suffering as an outcome. Designed and executed with known failure for most.


So, while not evil ..you saw none, spoke none, and heard no evil until (maybe) it fell upon you (if it did).

About right? ..or were you just drunk with the euphoric bliss and temporary seduced by the sirens?


All I need from anyone in this tract here is a "Yeah. So?
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". It's the intellectualization that's the most compelling element here in my seeking of insight.

While surely not everyone who gained are blood sucking leaches ..the whole enterprise was corrupt and was easily identifiable as such. I'm not the sharpest tool in the shed and saw the writing on every new wall that's constructed for this purpose. Assuming that you actually deserve the gain you've acquired, I'd surely have to assume that you did too.

Now some will cite "risk" and the gains earned for taking them. In our contemporary context, this essentially breaks down to dancing with the devil for a round or two ..and being slick enough not to lose your soul in the process. Aka: knowing when to quit dancing.
 
Originally Posted By: Shannow
Under oilyriser's system, there is no inflation.

You only need inflation to feed a debt based money system, where the system has to run ever faster to avoid catching it's tail.


Inflation is a product of the monetary supply being increased too rapidly. It has the effect of diluting the value of the existing money. But, new money has to be introduced or it's not possible for the system to grow.

That's always the trick isn't it? Increase the supply to feed growth but not to such an extent that inflation becomes an issue.

I'd give our recent leaders a FAIL on this.
 
LOL. I'd be willing to be that my net worth over the last 2 years has fallen as a percentage far more than yours and trust me, even if I wind up in a soup line, I'm not going to allow that to drive me to ruin.
 
Well, JS, from my take they masked the true money supply by having it fuel seamless consumption. It didn't appear to be in excess. It was only when the cash cow stopped giving milk that the over valuation of the current money supply allowed it to be seen for its true value. This was a phase shift that divorced true value from apparent value (true power vs. apparent power).
 
Originally Posted By: Primus
Originally Posted By: Gary Allan
Investors Buy U.S. Debt at Zero Yield


Those who buy US debt now at any yield are not investors, but either kamikazes, or potential criminals, or simply idiots.


Hardly. No matter the yield, people are running to "investments" that they believe have the greatest chance of survival. Given most of their other choices, money backed by 25+- random countries or by industry that's based on sales to the US, they've picked well.

If things get bad here, expect them to be far worse most everywhere else...
 
Originally Posted By: Gary Allan
Well, JS, from my take they masked the true money supply by having it fuel seamless consumption. It didn't appear to be in excess. It was only when the cash cow stopped giving milk that the over valuation of the current money supply allowed it to be seen for its true value. This was a phase shift that divorced true value from apparent value (true power vs. apparent power).


What some of us said *years* ago - All that peace and prosperity [censored] we heard about in the 90's was financed not by spending wealth we had created and accumulated but by consumption via increases in debt.

Sooner or later the bill comes due. Welcome to 2008.
 
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js, in Gary's near exhortation....

"All I need from anyone in this tract here is a "Yeah. So? ". It's the intellectualization that's the most compelling element here in my seeking of insight."

he's looking for a some poetry that gives him comfort knowing that a world where that promises risk aversion and progress simultaneously will never exist (at leat that's what he'd get from me if I had the time to do so right now).


Your response has derailed him a little, in that he's now using simple electrical circuit concepts in rather obtuse fashion to describe a downturn in an economic system where cycles have historically and will continue to occur.
 
Inflation/deflation is like making the mile longer to make you think you have a shorter commute. It's like making the gallon smaller to reduce the price of gas. It's dishonest, and spreads dishonesty throughout the system.

Controlled deflation will not end the world. The computer industry has some experience with constantly falling prices, and there's no great depression in that sector.
 
Oh jeeze.

I suggest if you own a home and sell it in the future, please sell it for equal to or less than you paid. That way you can remain honest.
 
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