Results from a $10 billion auction of 5-year TIPS drew a yield of -0.55%.

Neubarth

At the Ballpark July 30th
Nov 8, 2008
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Just a few minutes ago, results from a $10 billion auction of 5-year TIPS drew a yield of -0.55%. That was the first negative yield on record!

Oh Boy!
 
That is the Feds money machine at work injecting cash into the system buying up Treasuries. There is a lot of commodity inflation.
 
That is the Feds money machine at work injecting cash into the system buying up Treasuries. There is a lot of commodity inflation.

iow banks are using discount window money to buy inflation protected treasury securities instead of lending?
 
Treasury Draws Negative Yield for First Time
Conventional Treasuries rallied amid speculation about the amount of debt the Fed may purchase to spur the economy in a strategy called quantitative easing.

“It signals people’s expectation of the Fed being able to create some inflation with the QE program,” said Alex Li, an interest-rate strategist in New York at Deutsche Bank AG, one of 18 primary dealers required to bid at Treasury auctions. “With nominal rates so low, in order have high TIPS breakevens you’ve got to have negative real yields on the five-year.”
 
Technically this is called a liquidity trap and means that QE cannot have useful results anymore.
 
The Yen keeps deflating and deflating. In 1970 it was 300 to the Dollar

Now it is 80 to the dollar.
 
The Yen keeps deflating and deflating. In 1970 it was 300 to the Dollar

Now it is 80 to the dollar.

the reason for that is somehow related to the fact that Japan is lending to folks outside the Japanese economy.

But it may also mean that you can't print your way out of a deflationary trap as long as investors will still borrow your low interest currency.

Japan is not the USA. We will see.
 
The Yen keeps deflating and deflating. In 1970 it was 300 to the Dollar

Now it is 80 to the dollar.

Let that be a lesson to the money printing crowd that think dollar weakness is the only way to increase exports from the USA. We had 375% inflation compared to Japan. Yet Japan managed to increase automobile exports into this country & put our automobile manufacturing sector out of business.

The USA Big 3 were shut out of the small car & truck business by the Japanese auto manufacturers. So the USA Big 3 made their profits from Large SUVs & Large Pick-Up Trucks. As soon as the Japanese auto manufacturers started selling Large SUVs & Large Pick-Up Trucks into the USA it was all over for the USA Big 3 automobile manufacturers. You can believe the official cover story lie if you want, but this is what really happened.
 
The Yen keeps deflating and deflating. In 1970 it was 300 to the Dollar

Now it is 80 to the dollar.

Let that be a lesson to the money printing crowd that think dollar weakness is the only way to increase exports from the USA. We had 375% inflation compared to Japan. Yet Japan managed to increase automobile exports into this country & put our automobile manufacturing sector out of business.

The USA Big 3 were shut out of the small car & truck business by the Japanese auto manufacturers. So the USA Big 3 made their profits from Large SUVs & Large Pick-Up Trucks. As soon as the Japanese auto manufacturers started selling Large SUVs & Large Pick-Up Trucks into the USA it was all over for the USA Big 3 automobile manufacturers. You can believe the official cover story lie if you want, but this is what really happened.

Well that and the $4 gas did not help the SUV/Truck sales much either.
 
The Yen keeps deflating and deflating. In 1970 it was 300 to the Dollar

Now it is 80 to the dollar.

Let that be a lesson to the money printing crowd that think dollar weakness is the only way to increase exports from the USA. We had 375% inflation compared to Japan. Yet Japan managed to increase automobile exports into this country & put our automobile manufacturing sector out of business.

The USA Big 3 were shut out of the small car & truck business by the Japanese auto manufacturers. So the USA Big 3 made their profits from Large SUVs & Large Pick-Up Trucks. As soon as the Japanese auto manufacturers started selling Large SUVs & Large Pick-Up Trucks into the USA it was all over for the USA Big 3 automobile manufacturers. You can believe the official cover story lie if you want, but this is what really happened.

Well that and the $4 gas did not help the SUV/Truck sales much either.

That's what 375% inflation will do for you. It causes Gas Prices to rise. It does not help the UAW compete against foreign countries. The USA Big 3 Autos were begging for a weak dollar under the Bush administration. Bush gave them exactly what they wanted & they still blame him.
 
The Yen keeps deflating and deflating. In 1970 it was 300 to the Dollar

Now it is 80 to the dollar.

the reason for that is somehow related to the fact that Japan is lending to folks outside the Japanese economy.

But it may also mean that you can't print your way out of a deflationary trap as long as investors will still borrow your low interest currency.

Japan is not the USA. We will see.

Indeed, Japan is not the USA, and we will most certainly see!

Still, the basic parameters are there. I don't have the answers as I have explained that I know Economics is not a science and thus is not really predictable. I can just go with my gut feelings. Outside of fluctuations in value between currencies, I suspect that China and the other countries that are making money shipping product to the United States want to continue to make money doing much of the same. If so, they do not want the Dollar to inflate much.

The PEG of the Yuan to a low valuation against the Dollar is the way China has managed to build their growing economy. If they UNPEG it, they will have to keep their economy going via other means. They are talking about increasing their domestic market. Lots of people, but most of them are living in poverty. How do you create a large middle class out of those people in quick fashion??? I don't think it can be done.

Consider, China has four times our population. That is a hell of a lot of rice eaters.
Their economic might is fifty percent of ours. Their present industrial workers are making more than the impoverished peasants on the countryside, but as a percentage of the population, they are inky dinky compared to the shrinking but still large middle class in the United States. I look at that reality and realize that China needs us to continue to buy their product, or their economic resurgence may come to a stop.

Am I right or am I wrong?
 
The Yen keeps deflating and deflating. In 1970 it was 300 to the Dollar

Now it is 80 to the dollar.

the reason for that is somehow related to the fact that Japan is lending to folks outside the Japanese economy.

But it may also mean that you can't print your way out of a deflationary trap as long as investors will still borrow your low interest currency.

Japan is not the USA. We will see.

Indeed, Japan is not the USA, and we will most certainly see!

Still, the basic parameters are there. I don't have the answers as I have explained that I know Economics is not a science and thus is not really predictable. I can just go with my gut feelings. Outside of fluctuations in value between currencies, I suspect that China and the other countries that are making money shipping product to the United States want to continue to make money doing much of the same. If so, they do not want the Dollar to inflate much.

The PEG of the Yuan to a low valuation against the Dollar is the way China has managed to build their growing economy. If they UNPEG it, they will have to keep their economy going via other means. They are talking about increasing their domestic market. Lots of people, but most of them are living in poverty. How do you create a large middle class out of those people in quick fashion??? I don't think it can be done.

Consider, China has four times our population. That is a hell of a lot of rice eaters.
Their economic might is fifty percent of ours. Their present industrial workers are making more than the impoverished peasants on the countryside, but as a percentage of the population, they are inky dinky compared to the shrinking but still large middle class in the United States. I look at that reality and realize that China needs us to continue to buy their product, or their economic resurgence may come to a stop.

Am I right or am I wrong?

The US & China have a symbiotic relationship. We need each other more than most realize.
 

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