http://www.marketwatch.com/story/tr...ly-3-week-high-as-oil-stocks-waver-2016-07-13
Is the Market's treasury bond price signalling wrong?
Is the Market's treasury bond price signalling wrong?
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Free Market is signalling that the US has too little debt
- Thread starter ksen
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Huh?
The market clears at a price where the quantity demanded by buyers = the quantity offered by sellers.
I can't possibly imagine how you would torture the fact set here into the conclusion you are grasping at.
The market clears at a price where the quantity demanded by buyers = the quantity offered by sellers.
I can't possibly imagine how you would torture the fact set here into the conclusion you are grasping at.
laughing dog
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Then try thinking.
Sarpedon
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People buy US bonds because they think they are safe. Rising prices signify demand for safe savings, not demand for more US debt. If the US debt rises too much, the bonds would no longer be safe.
barbos
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Nice Squirrel
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Horatio Parker
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The MMT people say it's a debt swap, not a borrowing operation, since the US doesn't accumulate reserves of foreign currencies.
So only US govt debt, in the form of currency or bank reserves, is accepted as payment for Treasuries. A swap of non or low interest govt debt for interest bearing govt debt.
With investment down, there's lots of reserves sloshing around looking for yield. Sarpedon is correct.
But the better argument for increased govt spending is the high unemployment rate.
So only US govt debt, in the form of currency or bank reserves, is accepted as payment for Treasuries. A swap of non or low interest govt debt for interest bearing govt debt.
With investment down, there's lots of reserves sloshing around looking for yield. Sarpedon is correct.
But the better argument for increased govt spending is the high unemployment rate.
Econ 101 my friend, Econ 101.
whichphilosophy
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Guns are safer.
Sarpedon
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Look at this way. You have a guy, Jose. Jose earns 50,000 a year, and has a house with a 150,000 mortgage. He never misses a payment, and has excellent credit, so you buy his debt as a safe investment. Now that Jose is such a safe investment, do you encourage him to go and buy a 500,000 house, to pay off with his same 50,000 a year, thinking you can make the same safe return off his debt of 500,000?
(yes I know this actually happens. That doesn't make it not stupid.)
People are buying the promise of repayment, not the fact of debt.
(yes I know this actually happens. That doesn't make it not stupid.)
People are buying the promise of repayment, not the fact of debt.
barbos
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There is no such thing as "too little debt", there is "not too much debt" however.
Demand for more US treasuries means other options are crap.
Compared to what?
How did you derive the right, truthful and virtuous state of the world in which the debt price ought to be?
whichphilosophy
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https://www.nationalpriorities.org/campaigns/us-federal-debt-what/?gclid=CKmdoZHCxs8CFU-VaAodEMUKmg
As of December 15, 2015, the U.S. is $18.8 trillion in debt.
With a given population of 320 million it means that every man woman and child will have to pay out US$56,250.00. So a family with 2 children (any age) will have to pay US$225,000.00
If that's too little debt, then what is a high debt; US$1 quadrillion.
As of December 15, 2015, the U.S. is $18.8 trillion in debt.
With a given population of 320 million it means that every man woman and child will have to pay out US$56,250.00. So a family with 2 children (any age) will have to pay US$225,000.00
If that's too little debt, then what is a high debt; US$1 quadrillion.
Sarpedon
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Once again, you foolishly equate our national debt to an equal per person debt. It is really a debt as a total percentage of assets. What are the total assets of the USA?
To reduce it to a per capita number is fatuous, and a means of scaremongering used by the people who own most of the US's assets to shift the burden of repayment from their own shoulders.
The actual status is that everyone owes 723% of what they earn in a year. So seven and a quarter year's work total. An alarming amount, but when you think of it in terms of what one's mortgage is like, it becomes slightly less alarming.
wikipedia said:
To reduce it to a per capita number is fatuous, and a means of scaremongering used by the people who own most of the US's assets to shift the burden of repayment from their own shoulders.
The actual status is that everyone owes 723% of what they earn in a year. So seven and a quarter year's work total. An alarming amount, but when you think of it in terms of what one's mortgage is like, it becomes slightly less alarming.
Horatio Parker
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It depends. Since the US is a sovereign currency, it can always meet obligations denominated in dollars, even quadrillions. It's just a number.
And the "debt" isn't repaid; it's an accounting identity indicating how many dollars remain in private hands. If the govt taxed so that there were no national debt, there would be no private savings.
Debt is issued not to borrow, or to provide investment assets. Bonds are issued to maintain the overnight rate.
It's a policy decision. The govt cold set the interbank rate at zero, and not issue any bonds at all.
Sarpedon
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You might notice the debt figure I gave is higher than whichphilosophy's. I believe mine includes private debt, where his is only the public debt. The public debt is a small percentage of what americans owe.
barbos
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That would mean losing lots of money for a lot of americans.
Yes, US debt became a form of money, for now.
Horatio Parker
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All money is debt.
funinspace
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Close, but that would be YEN$1 quadrillion; or about US$9.6 trillion; or about 245% of GDP; or about US$75.6k per Japanese
http://www.agreenroadjournal.com/2013/08/japanese-debt-tops-one-quadrillion.html