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

To: ild who wrote (31271)	4/27/2005 12:46:54 PM
From: Crimson Ghost	Respond to of 110194

Fed did two coupon passes today. Uncle Earnie back in action.

To: ild who wrote (31271)	4/27/2005 1:02:14 PM
From: ild	Read Replies (2) \| Respond to of 110194

Date: Wed Apr 27 2005 11:26 trotsky (Hambone@stagflation and bonds) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved in a stagflation environment ( economic recession coupled with inflation ) , bonds would go down sharply. this is basically what happened in the 1970's ( but as i never tire to point out, we are NOT in the 70's...there are SOME parallels to the period, but in the most fundamental sense there are far more parallels to the 1930's or 1990's Japan ) . in the 70's, it was possible for the Fed to essentially monetize commodity price increases, as the private and public sector debt-bergs still had ample room to grow. nowadays the debt-berg is already way too large...it will need to be deflated away. Date: Wed Apr 27 2005 10:46 trotsky (Donald, 7:45) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved Bernanke's 'global savings glut' theory is merely the latest in a string of excuses meant to downplay the significance of the US current account deficit and the collapse in its economy-wide savings rate to near zero. it seems to implicitly suggest that the rest of the world is somehow imprudent for saving so much, and that US credit bubble based consumption is a favor being rendered by altruistic US consumers who commiserate with this international savings plight. as far as establishment apologias for the dangerous structural imbalances of the US economy go, this one surely takes the cake. gold bugs should be overjoyed if Bernanke actually manages to succeed Greenboink at the helm of the Fed...i couldn't think of anything better to happen for the PoG. Date: Wed Apr 27 2005 10:27 trotsky (Wiffo) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved frankly, i think the bond market couldn't care less about the govt. statistics...everybody knows of course how doctored they are - it's no secret for those who care to look, and one must assume that the big bond traders DO care to look - see Bill Gross essay on hedonics a few months back. what the bond market cares about is the future...the longer the maturity, the further out the future considered. and it does not see inflation in the future, but the opposite. the government could not possibly hope to successfully manipulate the bond market, either via its statistical releases or via monetization. there have been suggestions that the govt. is in fact monetizing bonds sub rosa via the Carribean tax havens, but there is ample reason to disbelieve this theory ( aside from the fact that it is as usual lacking even the most remote proof ) . such a monetization strategy would backfire very quickly and badly, by increasing the amount of money in circulation too fast. the banking cartel represented by the Fed is imo not interested in such an outcome - it won't implement actions that will undermine the very source of its power ( thus the famous Bernanke 'helicopter money' threat is imo just hot air ) . this is not to say that it might not be forced by circumstances to TRY it one day. but that would require a very dire situation indeed...it's not going to happen while confidence that everything is a-ok remains high. in any event, the bond market is simply too big to allow for successful manipulation. also, the reciprocity between interest rate trends and the growth of the money supply makes it a technical impossibility. Date: Wed Apr 27 2005 10:02 trotsky (well...) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved got bonds? riddle me this: what is the bond market worried about? inflation? what wall is the bond market climbing when all everybody talks about is supposed future inflation? Date: Wed Apr 27 2005 09:55 trotsky (@pm stocks) ID#248269: this latest collapse will probably produce a short term low.