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

To: mishedlo who wrote (71332)	10/7/2006 2:31:43 PM
From: ryoung8918	Read Replies (1) \| Respond to of 110194

Demand for treasuries in the US will easily replace any falloff by FCBs. Mish, if the masses in the US replace the FCBs as the big buyer of treasuries, wouldn't the US govt be tempted to start monetizing debt? With everyone rushing to save and a lot of those folks not particularly knowledgeable I see a real temptation for the govt to do this. They couldn't get away with it while FCBs are the main buyers, but could with Joe Public. Or does that not make sense?

To: mishedlo who wrote (71332)	10/8/2006 10:21:53 PM
From: bond_bubble	Respond to of 110194

I think most of the American savings are masquerading as SUVs, Chinese toys and other useless gadgets and ofcourse stocks and bonds. All of the above are not going to have any value when the bust starts. I dont think people are smart enough to "unload" these assets on foreigners (within the time frame of the early significant bust) early enough and by the time they unload, it must be valued at pennies. Will that buy enough treasuries? Also, I dont believe, foreigners will be buying treasuries as a safe haven when US govt defaults on GSE bonds. The only way Fed rate can be low is through Fed monetization rather than people buying US Treasuries. Ofcourse, I agree this is debatable and is just my opinion.