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To: Whatnot who wrote (138550)	7/13/2005 1:02:25 PM
From: Bitsurfer	Respond to of 152472

There are two sides to the debt coin. We're selling a bunch of debt, but our interest rates are staying relatively low, even in the face of the Fed raising short term rates. The ten-year bond is actually LOWER than when the Fed started raising rates. This is a huge departure from what is normally expected. Why? One take on why is that there is more demand for our debt than there is supply. Yes, we're borrowing huge amounts of money, but it seems there is more demand than what we are supplying. Given that, who's doing all the buying? Mostly Asian countries, Japan and China in particular. Why? They are trying to hold down thier currency relative to the dollar, so they can export more. Thier central banks are buying our bonds, but they are not looking to make a profit on thier bond buying...its kind of a loss leader so they can stimulate thier own economy through exports. So what does this mean? Well, you've got bond buyers who aren't operating with a profit motive with respect to the bond transaction, and are demanding more than we are supplying, so the interest rates are staying low, which is stimulating our economy more than the Fed would like. What happens when the Asian countries stop buying our bonds? Well, thier own countries will go into recession along with the US, so I don't see them stopping any time soon. For now, we're looking at continued low interest rates, and an overstimulated economy, which is going to lead to more asset bubbles here in the US. Question for us investors is, which assets? Does the housing market keep inflating, or are we going to see money flowing into other assets? Which assets?

To: Whatnot who wrote (138550)	7/13/2005 1:45:31 PM
From: peterk	Read Replies (1) \| Respond to of 152472

Are you saying that over the last 30 years our economy has gone backwards?? The country's infrastructure has declined? No new innovations, discoveries, or inventions have been brought forth? If that is the case we must not be on this thread talking about a revolutionary company.