The Epic American Credit and Bond Bubble Laboratory Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: kris b who wrote (75333)	12/12/2006 9:41:47 AM
From: Mike Johnston	Read Replies (1) of 110194

The very minute they start massively monetizing the bond market or buying assets, hyperinflation is "baked in the cake". Let me explain the above sentence: When Fed goes unconventional, the first thing they will do is peg long rates. That would entail buying massive amounts of government debt in the private market. But the additional inflation that would result from all this new money would push inflation sharply higher, increasing the theoretical "true free market" yield on the bonds, meaning the Fed would have to increase the purchases until finally it would be the only buyer in the market. That i think could result in hyperinflation since interest rates would be negative and getting progressively more negative as this process unfolds. The more negative the interest rates would get, the higher the inflation would go, making rates even more negative, resulting in even more inflation and on and on until money is wiped out in hyperinflation. If the Fed starts monetizing bond market, eventually they will have to monetize entire bond market = hyperinflation -g-

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next