If I am SNB, I really don't want you buying Swiss Francs. And if I am USA and the exporters start bitching, pretty soon, I won't want you buying USD. If it's bad for the elderly savers it's their own fault for not being diversified. Only a dumbass trader puts all his eggs in one basket, yet many elderly put all their eggs in interest bearing accounts. Where were the financial advisors telling them that it looks safe, but it is actually very risky.?
It's a strange strange world we live in master jack ..... http://www.zerohedge.com/news/2015-01-30/denmark-you-are-now-paid-take-out-mortgage So why have a bank middleman ..... I can foresee bank competition saying we will pay you more that that bank. The government will not be able to compete since there is a limit to what they can pay more for without laying off officials. If the story is true ...... economics .... yah gotta love it!
well that's the idea of those in my camp. The fed won't do anything meaningful until they lose control of the bond market and their hand is forced.
INTEREST rates are very low around the developed world; near-zero in nominal terms and negative in real terms. This is part of a deliberate policy by central banks to discourage saving and encourage borrowing. It has also been seen as a way of boosting the stockmarket and thus as creating a wealth effect for individuals, and boosting confidence. How might low real rates boost the equity market? There are two theoretical explanations. The first relates to the fact that equities should be priced as the value of future cashflows, discounted to the current day by an interest rate.* Lower that discount rate and you raise the present value of shares. I have argued that this rationale is flawed; if rates are now because economic growth is slow (and it has been), then one needs to lower the estimate of future cashflows. The effects cancel each other out. The second reason is simple asset switching; low rates on bonds and cash make investors seek out the greater attractions of equities; this may well be the driving force behind 2013's equity rally.
I don't think it will be directly the bond market. The bond market will most likely not be the cause. Inflation will be the cause. Potentially higher yields will be the effect of potentially higher inflation. As an aside, I don't understand why the FED did QE at all. A much more effective policy most likely would be just to state a max yield on the long end of the curve. For example, they could state that they do not want to the 10yrT to go north of say 3%. They can be standing there with a massive club waiting to smash any trader that dares to test the FED and trade bonds north of a 3% yield. The FED would most likely not have to purchase many Ts under this scenario. Therefore, the FED most likely would not have expand it's balance sheet as it has done and nobody would have to be scared of it's large balance sheet. The FED does something very similar with the short end of the curve all day everyday. That is what the FED does for a living on a daily basis. In other words, the FED manipulates the short end of the curve to achieve a yield that is close to its stated target rate.
I was starting to agree with what you stated above and then you totally lost me. Agreed. They are trying to inflate not deflate. The way that the monetary system is currently designed and capitalism are not the same thing. For example, there was still capitalism during the civil war and the US issued green backs a very different monetary system than we have now. Also, if I remember correctly, the USD was once backed by gold. Again, a very different monetary system and there was still capitalism. Can you provide me a historical example in which any form of government with a sizable population did not end up as an oligarchy or dictatorship? The polar opposite of capitalism is communism. All communist countries have been oligarchies or dictatorships. For example, USSR, China, North Korea, Cuba, etc. Do you prefer a dictatorship to an oligarchy? Do you know why democracies end up as oligarchies? It is because human beings are competitive. That is it. The only way a democracy doesn't end up as an oligarchy is if human cease to be competitive or humans cease to be part of the equation. A great case study is unions in the United States. Aren't they examples of smaller entities attempting their own form of socialism? Are they not essentially oligarchies? They have leaders that stay in power until they decide to retire normally and they get paid significantly more than the laborers in the union. Also, the unions demand that the laborers essentially pay taxes to the unions. Why is there such income equity within the unions within the US? Do you know why communist countries end up being dictatorships? It is because humans are competitive. That is it.
Some labor union examples: How much do the laborers in the Boilermakers' union get paid in total compensation on average? Is it anywhere close to $506,000. How much do the laborers in the Laborers union get paid in total compensation on average? Is it anywhere close to $441,000. How much do the laborers in the Transportation Communications union get paid in total compensation on average? Is it anywhere close to $750,000. http://www.washingtontimes.com/news...osses-salaries-put-big-in-big-labor/?page=all There you go. There are examples of oligarchies within essentially socialist democracies.
yeah, the SNB tried price fixing with their currency. Worked really well for a couple of years. When they finally got tired of sticking their fingers in the holes in the dyke, the whole thing broke. Probably no comparision to a little country with a little itty bitty currency, because they don't have a trillion dollars sitting around in the form of paper and ink. oh well, I can't really speak knowledgably on money, because I still think of it as something that is real.