Everything is based on faith and trust. M2 and wider aggregates are NOT growing despite what's been happening in the monetary base. Until that happens, your hyperinflation call is a bit early.
You are probably right. I have a small TBT position and will most likely sell tomorrow and wait for a better opportunity.
I think gold may be a better way to take the money supply position. It is a market that will thrive on worldwide currency instability and has enough of a speculative element to make your thesis prove right.. Japan at 1.92% for 30 yr with 170% debt to GDP is proof that the whole notion of further treasury sales driving rates up may be moot - at least for these sorts of developed nations that actually have a resource base and incredibly high productivity levels. Using the US argument of low overnight funds equating to inflation in the long run is nonsensical - look at Japan.
Yes, I'm aware of the economics behind inflation, but right now and for the near future we are deflationary. It will probably change, but if any country in the world is able to side step hyper inflation, it's the U.S.
The curious thing is the last time they were a 10% yield nobody wanted them because they thought rates were going higher
http://www.treas.gov/tic/mfh.txt US debt ceiling is 10-11T. 30% of debt is foreign held. Furthermore, recent trade deficits from the last decade account for most of the growth in that number. If those come down in the event trade continues faltering, savings rates increase internally and funnel $$ into treasuries. Pick your poison.
It is difficult to time when the inflation will really hit this time around. Under normal circumstances I would say 12 to 18 months but these times are not normal. Remember the Tarp money is being used by the banks to shore up their balance sheets. That money is not being lent and pushed into the general economy. It canât cause inflation until that happens. The problem the banks will have is finding qualified people to lend to whom also want to take on debt. Of course if the Treasury bills get hammered because offshore holders become uncomfortable with the debt the US is carrying then the dollar will get hammered and the inflation will arise from that front.
I think it's really binary here. If things gets worse and we end up with proper deflation, we're gonna have MUCH bigger problems than UST yields. If, on the other hand, we survive, we're DEFINITELY headed for some proper inflation. The temptation is too great, as inflation is an easy and efficient way for the US to get the world to pay for what it spends to get out of the crisis. To me, it's inevitable... Either case, I am buying gold...