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ralphfurley.
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May 22, 2009 at 8:57 PM #405154May 23, 2009 at 4:49 AM #404581
sd_matt
ParticipantAmateur for-fun question
If the $ value goes kaput then would a transition back into a production economy be expedited in the long run? Ya know…our exports being cheaper.
If so, then is Obama/Fed helping us in a back-handed way?
May 23, 2009 at 4:49 AM #404828sd_matt
ParticipantAmateur for-fun question
If the $ value goes kaput then would a transition back into a production economy be expedited in the long run? Ya know…our exports being cheaper.
If so, then is Obama/Fed helping us in a back-handed way?
May 23, 2009 at 4:49 AM #405065sd_matt
ParticipantAmateur for-fun question
If the $ value goes kaput then would a transition back into a production economy be expedited in the long run? Ya know…our exports being cheaper.
If so, then is Obama/Fed helping us in a back-handed way?
May 23, 2009 at 4:49 AM #405127sd_matt
ParticipantAmateur for-fun question
If the $ value goes kaput then would a transition back into a production economy be expedited in the long run? Ya know…our exports being cheaper.
If so, then is Obama/Fed helping us in a back-handed way?
May 23, 2009 at 4:49 AM #405275sd_matt
ParticipantAmateur for-fun question
If the $ value goes kaput then would a transition back into a production economy be expedited in the long run? Ya know…our exports being cheaper.
If so, then is Obama/Fed helping us in a back-handed way?
May 23, 2009 at 1:02 PM #404809patientrenter
ParticipantBob and Arraya,
I am still puzzled why you think inflation cannot be achieved.
If I understand you correctly, you think that the Federal Reserve’s purchases of US Treasuries will lead to a meltdown in the bond market, because it will lead to China pulling back from the US Treasury market.
Let’s follow that logic. China holds less than $1 trillion of US Treasuries. Sure, China could roil the Treasury market by threatening to sell some. They could go further and actually sell a chunk. But let’s consider a worst case scenario, and assume that China sells all its US Treasury holdings now. Does the US govt have the instruments to prevent a spike in US Treasury yields? Sure. The Federal Reserve can simply buy all the additional Treasuries on the market at a high enough price to keep the yield at today’s levels.
Will everyone be happy with that? Not everyone, but the Fed can certainly do it. It will lead to a quick devaluation in the dollar. But that just adds more import price inflation to the sum of inflationary pressures.
That’s an extreme reaction (US govt) to an extreme action (Chinese govt). In reality all the govts are more careful than that, so we are more likely to see carefully managed gradual movements spread over years.
What am I missing?
May 23, 2009 at 1:02 PM #405056patientrenter
ParticipantBob and Arraya,
I am still puzzled why you think inflation cannot be achieved.
If I understand you correctly, you think that the Federal Reserve’s purchases of US Treasuries will lead to a meltdown in the bond market, because it will lead to China pulling back from the US Treasury market.
Let’s follow that logic. China holds less than $1 trillion of US Treasuries. Sure, China could roil the Treasury market by threatening to sell some. They could go further and actually sell a chunk. But let’s consider a worst case scenario, and assume that China sells all its US Treasury holdings now. Does the US govt have the instruments to prevent a spike in US Treasury yields? Sure. The Federal Reserve can simply buy all the additional Treasuries on the market at a high enough price to keep the yield at today’s levels.
Will everyone be happy with that? Not everyone, but the Fed can certainly do it. It will lead to a quick devaluation in the dollar. But that just adds more import price inflation to the sum of inflationary pressures.
That’s an extreme reaction (US govt) to an extreme action (Chinese govt). In reality all the govts are more careful than that, so we are more likely to see carefully managed gradual movements spread over years.
What am I missing?
May 23, 2009 at 1:02 PM #405295patientrenter
ParticipantBob and Arraya,
I am still puzzled why you think inflation cannot be achieved.
If I understand you correctly, you think that the Federal Reserve’s purchases of US Treasuries will lead to a meltdown in the bond market, because it will lead to China pulling back from the US Treasury market.
Let’s follow that logic. China holds less than $1 trillion of US Treasuries. Sure, China could roil the Treasury market by threatening to sell some. They could go further and actually sell a chunk. But let’s consider a worst case scenario, and assume that China sells all its US Treasury holdings now. Does the US govt have the instruments to prevent a spike in US Treasury yields? Sure. The Federal Reserve can simply buy all the additional Treasuries on the market at a high enough price to keep the yield at today’s levels.
Will everyone be happy with that? Not everyone, but the Fed can certainly do it. It will lead to a quick devaluation in the dollar. But that just adds more import price inflation to the sum of inflationary pressures.
That’s an extreme reaction (US govt) to an extreme action (Chinese govt). In reality all the govts are more careful than that, so we are more likely to see carefully managed gradual movements spread over years.
What am I missing?
May 23, 2009 at 1:02 PM #405355patientrenter
ParticipantBob and Arraya,
I am still puzzled why you think inflation cannot be achieved.
If I understand you correctly, you think that the Federal Reserve’s purchases of US Treasuries will lead to a meltdown in the bond market, because it will lead to China pulling back from the US Treasury market.
Let’s follow that logic. China holds less than $1 trillion of US Treasuries. Sure, China could roil the Treasury market by threatening to sell some. They could go further and actually sell a chunk. But let’s consider a worst case scenario, and assume that China sells all its US Treasury holdings now. Does the US govt have the instruments to prevent a spike in US Treasury yields? Sure. The Federal Reserve can simply buy all the additional Treasuries on the market at a high enough price to keep the yield at today’s levels.
Will everyone be happy with that? Not everyone, but the Fed can certainly do it. It will lead to a quick devaluation in the dollar. But that just adds more import price inflation to the sum of inflationary pressures.
That’s an extreme reaction (US govt) to an extreme action (Chinese govt). In reality all the govts are more careful than that, so we are more likely to see carefully managed gradual movements spread over years.
What am I missing?
May 23, 2009 at 1:02 PM #405502patientrenter
ParticipantBob and Arraya,
I am still puzzled why you think inflation cannot be achieved.
If I understand you correctly, you think that the Federal Reserve’s purchases of US Treasuries will lead to a meltdown in the bond market, because it will lead to China pulling back from the US Treasury market.
Let’s follow that logic. China holds less than $1 trillion of US Treasuries. Sure, China could roil the Treasury market by threatening to sell some. They could go further and actually sell a chunk. But let’s consider a worst case scenario, and assume that China sells all its US Treasury holdings now. Does the US govt have the instruments to prevent a spike in US Treasury yields? Sure. The Federal Reserve can simply buy all the additional Treasuries on the market at a high enough price to keep the yield at today’s levels.
Will everyone be happy with that? Not everyone, but the Fed can certainly do it. It will lead to a quick devaluation in the dollar. But that just adds more import price inflation to the sum of inflationary pressures.
That’s an extreme reaction (US govt) to an extreme action (Chinese govt). In reality all the govts are more careful than that, so we are more likely to see carefully managed gradual movements spread over years.
What am I missing?
May 23, 2009 at 1:23 PM #404834peterb
ParticipantI doubt very much that China, the PRC, wants a currency stronger than the US$. They’re in a very big pickle. They’ve gone to extreme leverage for productive growth and no one is now buying what they produce. A stronger yuan would only increase their problems. This is trouble in a very big way for them. What are they now going to do with all these people that worked in factories? Back to the farm? Maybe, if they want to keep eating.
May 23, 2009 at 1:23 PM #405081peterb
ParticipantI doubt very much that China, the PRC, wants a currency stronger than the US$. They’re in a very big pickle. They’ve gone to extreme leverage for productive growth and no one is now buying what they produce. A stronger yuan would only increase their problems. This is trouble in a very big way for them. What are they now going to do with all these people that worked in factories? Back to the farm? Maybe, if they want to keep eating.
May 23, 2009 at 1:23 PM #405318peterb
ParticipantI doubt very much that China, the PRC, wants a currency stronger than the US$. They’re in a very big pickle. They’ve gone to extreme leverage for productive growth and no one is now buying what they produce. A stronger yuan would only increase their problems. This is trouble in a very big way for them. What are they now going to do with all these people that worked in factories? Back to the farm? Maybe, if they want to keep eating.
May 23, 2009 at 1:23 PM #405380peterb
ParticipantI doubt very much that China, the PRC, wants a currency stronger than the US$. They’re in a very big pickle. They’ve gone to extreme leverage for productive growth and no one is now buying what they produce. A stronger yuan would only increase their problems. This is trouble in a very big way for them. What are they now going to do with all these people that worked in factories? Back to the farm? Maybe, if they want to keep eating.
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