Home› Precious Metals

U.S. sells debt with a negative yield for 1st time

rpwrpw Posts: 235 ✭✭
in Precious Metals
And so cometh inflation.

Reuters
imageimage Small Size National Bank Note Type Set $5-$100

Comments

  • percybpercyb Posts: 3,324 ✭✭✭✭


    << <i>And so cometh inflation.

    Reuters >>



    Craziest economic policies I've ever heard of. Is this the best Harvard can produce?
    "Poets are the unacknowledged legislators of the world." PBShelley
  • derrybderryb Posts: 36,793 ✭✭✭✭✭


    << <i>

    << <i>And so cometh inflation.

    Reuters >>



    Craziest economic policies I've ever heard of. Is this the best Harvard can produce? >>


    This is what happens when you put government in charge of education. Lord help us if they ever establish a Department of Coin Collections.

    "Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey

  • renman95renman95 Posts: 7,037 ✭✭✭✭✭


    << <i>

    << <i>

    << <i>And so cometh inflation.

    Reuters >>



    Craziest economic policies I've ever heard of. Is this the best Harvard can produce? >>


    This is what happens when you put government in charge of education. Lord help us if they ever establish a Department of Coin Collections. >>



    Numismatists should be in charge of education.
  • 7over87over8 Posts: 4,733 ✭✭✭
    So lets see - you buy these bonds at a premium for a negative rate of return currently....

    oh yeah, but when infaltion kicks in....whola.....you get a great return,

    except, they forgot to tell you, they calculate the inflation rate.......which has been understated for years!!!!!
  • ebaytraderebaytrader Posts: 3,312 ✭✭✭



    << <i>So lets see - you buy these bonds at a premium for a negative rate of return currently....

    oh yeah, but when infaltion kicks in....whola.....you get a great return,

    except, they forgot to tell you, they calculate the inflation rate.......which has been understated for years!!!!! >>



    There is method to their madness. What few wholesale guys still in there are just parking $ praying (or maybe preying) for inflation.
    Their cost of $ is virtually zero and at the worst they get a ½% coupon to make it a wash and the only loss is time.
    If govt inflation numbers move ahead to the predicted 1½% or higher, they guys are golden. Fact is the big $ guys are betting on some inflation...as we all should.
  • 7over87over8 Posts: 4,733 ✭✭✭
    ok - so purchasing in volume might make you something

    it still doesnt discount the fact that the numbers that drive the rate on these bonds will not be reported correctly

    I also understand that "retail" purchases if TIPS have been limited, to a certain dollar amount.......so much for volume for the small guy

    just a bad play, I wouldnt get anywhere near it.
  • secondrepublicsecondrepublic Posts: 2,619 ✭✭✭


    << <i>Fact is the big $ guys are betting on some inflation...as we all should. >>



    Actually, mortgage rates -- which reflect interest rate expectations -- are at all time lows. Can get a 30-year fixed rate for just over 4%. Seems the "big guys" are betting the opposite.
    "Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
  • jmski52jmski52 Posts: 22,825 ✭✭✭✭✭
    It kinda looks like they are foreshadowing that they intend to punish anyone who doesn't buy into their debt offerings.
    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • jmski52jmski52 Posts: 22,825 ✭✭✭✭✭
    For the first time ever, inflation-protected Treasury bonds sold with a negative yield. Investors bought $10B of five-year TIPS yesterday with a yield of negative 0.55%, in a bet that the Fed will be successful in stimulating the economy, boosting inflation and making the TIPS more valuable. If the investors turn out to be wrong and inflation doesn’t appear as they expect, they could end up paying to lend money to the government.

    TIPS go negative...

    So, the question is - how could it happen that inflation doesn't appear as anticipated, while all this QE is going on and the Treasury has to resort to buying it's own issues behind the scenes through foreign banks? How could inflation not appear? Geithner says he's going to make sure that the dollar doesn't lose its value while he is inflating it, and in the meantime - deficit spending is outa sight.

    Paying to lend money to the government who will only devalue their money by 8% a year is a good deal? Someone help me understand this. I'm getting confused over here.image
    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • waynemewayneme Posts: 852 ✭
    it's good if your the one who oew's it and buys it
    win win for the gov
  • coinnerdcoinnerd Posts: 492 ✭✭✭
    Actually, mortgage rates -- which reflect interest rate expectations -- are at all time lows. Can get a 30-year fixed rate for just over 4%. Seems the "big guys" are betting the opposite.

    I don't know about that. The govment is financing and owns all new mortgages, so that market is now artificial and controled, too.
Sign In or Register to comment.