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remember: there are "professional" investors buying bonds w/ -10% real rate now
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Date: May 9th, 2021 11:19 PM Author: stimulating feces (http://www.autoadmit.com/thread.php?thread_id=4830640&forum_id=2#42432544) |
Date: May 9th, 2021 11:20 PM Author: zombie-like godawful filthpig casino (http://www.autoadmit.com/thread.php?thread_id=4830640&forum_id=2#42432551) |
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Date: May 9th, 2021 11:21 PM Author: massive translucent mexican death wish ELI5 (http://www.autoadmit.com/thread.php?thread_id=4830640&forum_id=2#42432552) |
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Date: May 9th, 2021 11:21 PM Author: charcoal duck-like quadroon headpube (http://www.autoadmit.com/thread.php?thread_id=4830640&forum_id=2#42432556) |
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Date: May 9th, 2021 11:24 PM Author: stimulating feces if you own a bond that is paying 3% coupon, and inflation is 2% like the CPI says, then your real rate is 1%
if you own a bond that is paying 3% coupon, but inflation is actually 15%, then your real rate is -12%. put another way, you are letting someone borrow your money in order to pay you back less money. factoring in the time value of money for your capital return, the bond is worthless.
$130 trillion+ in bonds are premised on the idea that scenario #1 is the case, not scenario #2. |
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Date: May 9th, 2021 11:28 PM Author: vibrant self-absorbed blood rage Are you saying scenario #2 is happening now? (http://www.autoadmit.com/thread.php?thread_id=4830640&forum_id=2#42432601) |
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Date: May 9th, 2021 11:29 PM Author: stimulating feces it has already happened in input prices. see lumber doing a 4x LTM.
austrian economics say that consumer prices are generally affected ~18 months after the monetary expansion |
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Date: May 9th, 2021 11:31 PM Author: vibrant self-absorbed blood rage Are the professional investors buying these bonds just retarded? Or do they know something we don't? (http://www.autoadmit.com/thread.php?thread_id=4830640&forum_id=2#42432625) |
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Date: May 9th, 2021 11:35 PM Author: stimulating feces in the US, roughly 80% of national debt is held by the public. so mutual funds, pension funds, social security funds, military retirement funds, individuals, etc. so basically the average american is loaning the government money to fund its insanity, and will be rewarded with nothing
the fed increasingly holds a lot of debt because it's so garbage that nobody else wants to touch it. the fed is now doing $120 billion in treasury purchases PER MONTH in order to prop up the market and keep rates low
soverign nations have been increasingly dumping US treasuries, especially china/russia, which have been stockpiling gold |
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Date: May 9th, 2021 11:43 PM Author: massive translucent mexican death wish This is pretty fucked. At some point, the bond yields rise because investors bid them up, unless the fed just buys everything. (http://www.autoadmit.com/thread.php?thread_id=4830640&forum_id=2#42432699) |
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Date: May 9th, 2021 11:44 PM Author: charcoal duck-like quadroon headpube bond yields rise from selling not buying (http://www.autoadmit.com/thread.php?thread_id=4830640&forum_id=2#42432707) |
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Date: May 9th, 2021 11:45 PM Author: stimulating feces yes exactly the fed's buying keeps bid looking reasonable. they are in an inescapable dilemma. either let rates rise, in which case the real estate, stock and bond market will collapse, or they continue to buy bonds which jacks up inflation
at some point they will have to initiate "yield curve control" which is basically them saying that rates of a certain duration are being frozen at X%, and they will print ANY amount of money to do that. at that point, all foreign countries can dump 100% of treasuries without losing any money. that is when hyperinflation will begin. |
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Date: May 9th, 2021 11:46 PM Author: massive translucent mexican death wish Powell seems in over his head but acts like he isn’t (http://www.autoadmit.com/thread.php?thread_id=4830640&forum_id=2#42432723) |
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Date: May 9th, 2021 11:50 PM Author: stimulating feces powell isn't in charge of anything, he's just the unfortunate sap that is going to take the fall (http://www.autoadmit.com/thread.php?thread_id=4830640&forum_id=2#42432735) |
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Date: May 9th, 2021 11:51 PM Author: zombie-like godawful filthpig casino who is in charge? (http://www.autoadmit.com/thread.php?thread_id=4830640&forum_id=2#42432745) |