I agree with this. short treasuries makes sense on the level I point out, but following Japan's lead, there's no reason we've just not reset to a new price floor. Japan did not experience a capital flight, nor are we (at present). If we have enough savings internally to support our debt loads (which was Japan's situation), there is no reason treasury prices can't stay here and go higher. The whole capital flight + treasury crash theory is based on an assumption (possibly flawed) that we need foreign capital to sustain our debt needs. At present, this has been true, but elimination of our consumption imbalances (and export of dollars) while simultaneously printing more money could have the effect of basically redirecting that same capital to buy treasuries (versus foreign assets) with the correct set of government policies. Regardless, now is not the time to short treasuries simply because we already know the Fed has announced they will be buying debt with printed money. Better idea to let the programs begin en masse and see where the market goes. Interesting points about deflation in real terms against inflation in nominal terms concerning hyperinflation.
I think the Fed and Government will make every attempt to do everything possible to avoid a long term deflation. The only thing worse than owing $11 trillion with another $50 trillion of promises and getting caught in a deflationary spiral would be printing enough to put us into a hyperinflationary spiral.
This is true, unfortunately the government and Fed have shown clearly that they have no regard for "future" consequences, only the "here and now". If there's anything we can count on from them, it's overcorrection.
Would it really be worse? This no doubt is what the policymakers are debating right now. With deflation if you are leveraged you die. The people who control our society are choking on leverage. They need nominal growth in dollar terms to get themselves wiggle room. This means hyperinflation may be preferable to them over deflation.
My judgment isn't the issue. Just looking for views I haven't considered - but with substance. Even the argument of the exhausted consumer needs context - ie what are disposable income #s versus existing average credit load. Throwing around big numbers without context (that most people do that argue the deflationary spiral will continue), ie "The US consumer is tapped out with 1.5T of credit card debt" is not really an affective argument held alone. These issues are all too complex.. I'm already positioned, regardless..
Yeah, the Fed buying long bonds is another reason this could be a tricky trade. I don't dispute that bonds are overvalued at these levels. But then so were stocks in 1998 and 1998, when shorting would have been very painful. In my experience, valuation-driven trades also need some kind of catalyst to kick start a new trend against the overvaluation (e.g. the expiry of tech stock lockups in spring 2000; or Japan consumer prices finally going positive year on year in the early 2000s, causing JGBs to crash). Without that kind of catalyst, things can stay expensive for a long time.
The banks(big ones) aren't lending because they can't securitize any of the loans they make right now, hence their profit/risk analysis is very unfavorable. They need to get the securitization market going again.
i see many humans are scared, you are mainly reflecting how your planet feels, i stole her soul some time ago, no one saw this coming. She is trying to shake you off, hoping that i will free her soul many years ago i realized it is not worth taking revenge in the physical world, you can't achieve much in your lifetime, and you usually get caught before you have taken revenge on all the people you want to, not many people have power in levels other than the physical world and those who do can't do much with it, plus no one believes you, that is actually the best thing about it, it is a great time to be in, you come out and tell people that you are robbing their souls and they just look the other way, seeing such i am certain i have come at the right times my efforts are paying off many times, those who bring suffering to mankind will prosper and those who try to set forth justice will be punished if you believed what you just read you are an idiot, i was f_kin joking