Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: Crimson Ghost who wrote (29317)	5/4/2005 10:10:04 AM
From: Tommaso	Read Replies (2) of 116555

>>>Issuing the long bond again, provides more evidence that that the Treasury expects long rates to move higher over time. This comes soon after they decided to stop making savings bond rates adjustable.<<< I wish I didn't have to take such a cynical view, but the government is getting set up to screw the public out of its real savings for the next 20 years. The 30-year bond is much in demand, the initial interest rates will be unrealistically low, the government will get the money at bargain rates, inflation will kick in, and then the bonds will be worth up to 40% less than face value as interest rates go on up. Meantime, small savers will get less than the inflation rate on their savings bonds. It all happened before, in the 1960s and 1970s. Actually it could be a lot worse than what I have just described. I just don't want to sound any crazier than I actually am. Does anyone remember those 13% government bond rates? If you don't believe me, just look at the May 2014 government bond quote. What do you suppose treasuries with 5% coupons were selling for when that one was issued? Probably less than 60 cents on the dollar.

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