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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: GraceZ who wrote (51386)1/25/2006 3:15:28 PM
From: bond_bubble  Read Replies (3) of 110194
 
I was lending for less because if I dont, then govt was going to print money and give it at a lower rate!!! I cant compete with govt!!! So not because it is low inflation - but I cant fight the Fed!!

And the bond market also has been fooled to thinking the CPI prices that excludes housing cost, investment cost (i.e future retirement cost) is what is important. Fed has outright forced them to think inflation as:
1) Chinese wages 2)Computer speed 3)Quality that you seem to be espousing etc....

So what if the Fed has fooled the bond market? So what if the Fed has forced me to lend lower? So what if the govt runs a $1 hospital? So what if govt sells $1 cars? As long as there are private enterprises also existing, there is free will right? You are a great admirer of this $1 cars, $1 hospital and -ve real interest rate!! Although you, as a consumer will not choose $1 cars as they might be risky but buy 20K car with nice quality etc!!!

This is all nice and dandy when the honey is flowing. What happens when there are no more private hospitals, private car companies as they die competing govt? And what happens to my money in the bank if there is either (a) hyper inflation OR (b) deflation and bank defaults. Oooh ya, I know, I've the "freedom" to choose whichever bank I want to deposit in!!! And there are plenty of banks that transact in gold money around. Do you see them? Oooh, BTW, those Chinese making the $1 cars and the Indian doctors providing $1 hospital and law services - now might decide to charge more!! And US lawyers, auto workers have no jobs!!! Is the honey still flowing?
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