A spike in 10-year Treasury yields could trigger a financial crisis to rival the Great Depression

Discussion in 'Wall St. News' started by Altavest_Erik, Sep 17, 2018.

  1. jasonc

    jasonc

    The difference though is those countries with high inflation had large amounts of foreign denominated debt. Bridgewater did research finding that countries with locally priced debt was able to much more gradually accumulate the government debt without causing problems similar to venezuela et al. I would say the example goes beyond 1 now as Japan has monetized debt, ECB has significantly increased their activity too. The USA will do the same if there was a problem or a spike in yields. It will have negative consequences which I would prefer to focus on profiting from instead of them allowing a default of govt bonds.
     
    #11     Sep 18, 2018
  2. Fully agree. This is why I wrote "apparently".

    I think QE will share the same fate as Keynesian deficit spending.

    Keynes never advocated a continuous expansion of public debt. He advocated deficit spending during a recession and paying down during expansions. But the "paying down" part almost never happened. A side effect of our political system. It's always easier to push pain into the future, onto the shoulders of future generations that do not have a vote yet.

    The same seems to happen with QE. QT is happening now in a slow fashion however I doubt we'll be back at neutral when the next crisis comes.
     
    #12     Sep 18, 2018
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