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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (233750)	10/7/2013 2:22:26 PM
From: cosmicforce	Read Replies (1) \| Respond to of 542243

It is not honest to say that the SSTF is making a profit on bonds that are not sold to the general public - this was a disturbing fact I learned recently. These are "special" bonds that don't float like other bonds do... and when inflation increases (as $85 billion a month is being "minted" as debt in various forms of mortgage backed paper and T-bills), bond prices would normally fall in public markets. Because the government is the only buyer and seller, these bond values are not accounted using GAAP. Let's say you will fund a future family vacation with cash contributions today. You take the kids allowance and give them IOUs (bearing interest to them, but not fungible outside your family). You use the actual cash and buy cars and repair roof plus build a large in-ground swimming pool, performing general expenditures with the inflows. Should the kids be concerned about the vacation? I think so - especially if the parents are talking about not increasing their credit lines, plus have serious health issues causing their future income to be in doubt. The money put into cars, roofs and pools only depreciates. The parents had a good credit score but have repeatedly done things to worsen it, meaning the likelihood of paying face value, let alone interest on IOUs, is increasingly sketchy. Further, their current behavior will cost the whole family more in the future. In real life, 3d, or whatever we call this thing is that we live in, the facts are similar. We have a demographic of marginally employable youth that simply won't have the income to fund future debt payments which will be bloated by war expenses and increased intrest costs. Plus we have a mountain of retirees heading for the retirement gates, cashing in their stocks (depressing prices on those assets), diverting more cash flows, and sketchy paper notes in the piggy bank to pay everyone. I don't see why it is rational to be Pollyanna about this...