America needs to default

[rupol2000]

By contrast, I have seen him appearing to fondle the prepubescent or barely-pubescent breasts of young girls. That seems more like pedo behavior than homosexual behavior.

And what's that?

And if he was only a heteropedophile, would that raise the prestige of the Treasuries?

 

[Woodznutz]

This money does not move. When China buys treasuries, it is equivalent to a freeze, the money issued by the Fed is simply extinguished.

So bonds have the ability to take money out of circulation? That's a lot of money absent from the global economy. So a $100,000, 30 year treasury bond will take $100,000 out of the economy for 30 years (unless it is sold on the secondary market)?

 

[rupol2000]

So bonds have the ability to take money out of circulation? That's a lot of money absent from the global economy. So a $100,000, 30 year treasury bond will take $100,000 out of the economy for 30 years (unless it is sold on the secondary market)?

Yes

 

[Woodznutz]

Wow, the whole world saw except you.

Two of the girls are grimacing.

 

[Toddsterpatriot]

So bonds have the ability to take money out of circulation? That's a lot of money absent from the global economy. So a $100,000, 30 year treasury bond will take $100,000 out of the economy for 30 years (unless it is sold on the secondary market)?

He's talking out of his ass.

 

[Woodznutz]

Yes

So if I buy a five year U.S. Treasury bond for say $1000, the government gives me a note of indebtedness (the printed bond) then sequesters the $1000 for five years, then returns it to me with interest. What would be the point of that?

 

[rupol2000]

Woodznutz

In general, there is a rule: when the asset is returned to the issuer, it is extinguished. The dollar is an asset to the Fed. Every time a dollar enters the Fed's account, it evaporates, it only comes to life if it is demanded back. Whether the dollar is in the Fed's account or not does not matter, it is still out of circulation. And no matter who holds it, it can be an American holder. But if China starts mass selling of treasuries now, part of this volume will have to be bought by the Fed.
In addition, if they are bought out by institutionals, it will hit them too.

 

[rupol2000]

So if I buy a five year U.S. Treasury bond for say $1000, the government gives me a note of indebtedness (the printed bond) then sequesters the $1000 for five years, then returns it to me with interest. What would be the point of that?

In international trade, it makes sense to finance the US government at the expense of foreign export economies.

It makes no sense for you to hold Treasuries as an investor, there is a ridiculous percentage that does not exceed inflation.

It makes sense for you to invest in papers like Chinese, there is a good profit

 

[Woodznutz]

Woodznutz

In general, there is a rule: when the asset is returned to the issuer, it is extinguished. The dollar is an asset to the Fed. Every time a dollar enters the Fed's account, it evaporates, it only comes to life if it is demanded back. Whether the dollar is in the Fed's account or not does not matter, it is still out of circulation. And no matter who holds it, it can be an American holder. But if China starts mass selling of treasuries now, part of this volume will have to be bought by the Fed.
In addition, if they are bought out by institutionals, it will hit them either.

Bonds, once bought on the primary market, are traded on the secondary market, not to the original issuer. With interest rates low bond prices are high and thus may not have a strong market. Bond traders also receive commissions on secondary bond sales, so anyone 'dumping' their bonds is likely going to lose money. Such sales usually indicate a need to infuse a business with equity, even if at a loss.

If the government buys back those bonds it will be at a price favorable to the government. In this case the U.S. will come out favorably, China will take a bath.

 

[Woodznutz]

In international trade, it makes sense to finance the US government at the expense of foreign export economies.

It makes no sense for you to hold Treasuries as an investor, there is a ridiculous percentage that does not exceed inflation.

It makes sense for you to invest in papers like Chinese, there is a good profit

There is also risk as China manipulates the value of its currency to gain the trade advantage. However, buying Chinese securities is also risky for the same reason. U.S. securities are more secure, thus are often bought to secure financial assets, not to profit from them.

 

[rupol2000]

Bonds, once bought on the primary market, are traded on the secondary market, not to the original issuer. With interest rates low bond prices are high and thus may not have a strong market. Bond traders also receive commissions on secondary bond sales, so anyone 'dumping' their bonds is likely going to lose money. Such sales usually indicate a need to infuse a business with equity, even if at a loss.

If the government buys back those bonds it will be at a price favorable to the government. In this case the U.S. will come out favorably, China will take a bath.

This is all just covering up the tracks so that the diagram is not so obvious. In fact, it all comes down to the fact that the government throws bonds on the market, the Fed buys them out and resells them to foreign holders and institutionals. This is the mechanism for issuing money in the United States, this is how the dollar is printed.

And as an investment tool, no one needs them; de facto, they almost do not rotate in the secondary market. They all end up in foreign Central Banks and institutionals.

 

[rupol2000]

There is also risk

Really risky papers there are huge profits. In reality, these ratings are just drawing for the sake of politics.

 

[Woodznutz]

This is all just covering up the tracks so that the diagram is not so obvious. In fact, it all comes down to the fact that the government throws bonds on the market, the Fed buys them out and resells them to foreign holders and institutionals. This is the mechanism for issuing money in the United States, this is how the dollar is printed.

And as an investment tool, no one needs them; de facto, they almost do not rotate in the secondary market. They all end up in foreign Central Banks and institutionals.

Until they're dumped prior to maturity.

Russia and China may simply be redeeming mature bonds and not repurchasing. That's not dumping. And that's not forcing the government to buy back bonds, it's simply the fulfilling of the terms of the bonds by both parties.

 

[rupol2000]

as China manipulates the value of its currency to gain the trade advantage

In fact, all these manipulations boil down to the fact that they exchange foreign currency for issuance yuan, they depreciate their currency in order to stimulate exporters and depreciate the labor force. This is the flip side of export of inflation. The dollar that the Fed issues is de facto converted into yuan. Therefore, there is no great inflation in the US despite the large issue of the dollar.

 

[Woodznutz]

Really risky papers there are huge profits. In reality, these ratings are just drawing for the sake of politics.

In the financial world rating are meaningful. Older investors, like myself, prefer security with smaller gains, even if it means losing to inflation.

*Inflation only affects you if you buy something that is overpriced due to inflation. Older folks usually have major assets already paid for and inflated prices of everyday items are not a big concern.

 

[rupol2000]

Until they're dumped prior to maturity.

Russia and China may simply be redeeming mature bonds and not repurchasing. That's not dumping. And that's not forcing the government to buy back bonds, it's simply the fulfilling of the terms of the bonds by both parties.

Formally, they can, but they always bought more than they extinguished. There was coercion. So the US debt grew. This is true for all "owners", all "post-industrial" economies parasitize on exporters. But now it may end for the US.

 

[rupol2000]

In the financial world rating are meaningful.

Ratings for these securities are drawn as politicians want. There are no objective risk criteria

 

[Woodznutz]

Ratings for these securities are drawn as politicians want. There are no objective risk criteria

Government securities really don't need ratings as they are the most secure financial investments you can hold, and the biggest reason for their low interest rates.

 

[rupol2000]

If I were an ordinary Russian troll, I would only be happy about it. In Russia now the masses hate America. But I have a different opinion. I look to America as the last stronghold of right-wing freedom. I am a supporter of the Reagan line.

 

[rupol2000]

Government securities really don't need ratings as they are the most secure financial investments you can hold, and the biggest reason for their low interest rates.

Like I said, it's all a fairy tale. These ratings are taken from the ceiling, they are completely dependent on politics.