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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Joe S Pack who wrote (42237)	11/3/2008 11:07:28 PM
From: TobagoJack	Read Replies (1) \| Respond to of 219165

monetary inflation is insidious people, broadly defined, always pay the elites, everywhere, get richer, by making poor everyone else china gets its dollars from the usa usa gets it loans from china the bomb gets passed back and forth the issue then is what the money does and enables and engenders while transiting each jurisdiction the the bomb blows up

To: Joe S Pack who wrote (42237)	11/4/2008 12:48:13 AM
From: energyplay	1 Recommendation Respond to of 219165

The money can come from two places - 1) Oil countries and oil companies. Exxon (XOM) with 12 Billion profit last quarter, Qatar, Abu Dabai, Saudi Arabia. They will park some money in Treasuries. Also include some defense contractors, like Haliburton ;-) This can be the bulk of the money. 2) Everybody who pulled money out of the market will tend to cause some purchase of Treasuries, if not directly, then by their bank. This Huge move has probably already soaked up a few hundred billion in short term tresurey debt. Remember a few weeks ago, when short term rates went to under 0.20 % ? The Fed and Treasury had to create much more short term paper to meet that demand. There is also the unwinding of the dollar carry trade. Note that the interest rates on this money are VERY low. ***** Very Short term, like the next 4 - 5 months, tresury may need to borrow even more to keep medium term interest rates high enough for banks to make good money. The crunch may come either in the summer or this time next year. However, a few things can postponne the crunch - 1) Higher capital gains tax reciepts as people get their deals done before taxes are increased. This may be a moderate or large effect. 2) Withdrawl or significant ramp down from Iraq or Afghanistan would save 200 - 400 Billion per year, and that savings will go forward, at least until the next war. There are a bunch of circular effects with either a cheap or strong dollar, cheap dollars mean more exports, strong dollars mean lower oil prices. The risk of a long term rejection of US treasury paper will be an issue late next year and in 2010. Right now, it is not certain that the FED etc. can or will completely inflate the US dollar out of this present crisis. Inflation is the script, but things don't always go that way, at least short term.