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Gold/Mining/Energy : Big Dog's Boom Boom Room
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dvdw©
To: Biomaven who wrote (187514)12/30/2014 5:43:19 PM
From: Sweet Ol1 Recommendation  Read Replies (1) of 206093
 
>>The cost of money is extremely low for the same reason that the price of other commodities are extremely low - demand is less than supply.Be nice then if you could explain to me why the demand for money is low...There is no mystery why short rates are low - they are set by the Fed. So the real question to my mind is why long rates are also low. QE has something to do with that, but it is clearly not all that is going on.
The demand for money (e.g. loans) is low because industrial capacity is running well below design capacity, there is no need to borrow to increase capacity. Credit-worthy borrowers don't seem to want to borrow except for drillers, some of whom are not so credit-worthy.

Bonds are a form of credit and most buyers do not want them at these prices. So the only buyer is the Fed and they buy at low rates to try to get companies to do something useful for the economy. The Fed wants US bond rates low so the government can continue to borrow cheaply.

None of that is working!

Blessings,

SOJ.

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