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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (21013)	10/29/2004 8:00:55 PM
From: orkrious	Respond to of 110194

decent piece by puplava tonight financialsense.com

To: Crimson Ghost who wrote (21013)	10/29/2004 11:48:46 PM
From: Carlos Blanco	Read Replies (2) \| Respond to of 110194

No market dominated by rational profit-seeking investors would price 10-year treasuries to yield just 4% in the current environment IMHO. intentional central bank manipulation is definitely a large part the cause....but the other large cause is plain stupidity. from just random conversations with average people worldwide, it's clear to me that most individuals (and money managers) have no understanding of economics and forex. hence they robotically keep on buying US govt bonds, which are cleverly marketed as the safest most risk-free investment in the universe. in that context, 10yr yields at 4% is no more breathtaking that people paying 40x earnings for the nasdaq with a 0% yield. it's all part of the same wave of human stupidity and malinvestment that seems to have gone parabolic since the 90s. it might be interesting to conduct an unscientific poll regarding the true market rate for a 10-year dollar investment among the thinking humans who frequent this forum. the real inflation rate is at least 5% and most likely running close to 10%. within the next 10 years, a dollar devaluation of at least 20% (most likely, 40%) looks inevitable, including a repegging of asian currencies. to keep things simple i'll completely ignore terrorist events, natural resource exhaustions, increasing deficits/corruption, and the possibility of the fiat money system blowing up altogether. my guess is that it would require an interest rate of at least 15% per year in order for me to sleep at night if my savings were to be locked up in dollar-denominated paper until 2014.