Completely the wrong thing to do. Instead of buying notes and bonds, the Fed should be selling 30 year bonds at 3.5% to 4% in order to lock in low cost financing of the budget deficit.
Instead, they clearly intend to pay off the debt with inflated dollars. The irony is that while the immediate effect may be somewhat lower interest rates, the long term effect will be interest rates back at 18% or higher. Some of us have seen this movie, and it does not have a happy ending.
But if we’re headed for inflation ( prices and wages ), doesn’t it make sense for those who can afford it to buy property or equities now,
knowing that price levels will be inflated within a few years ?
Ok, so buying US Treasuries increases demand, so lowers their yield – but doesn’t Congress finance the deficit with Treasuries – hence increasing the supply of Tresuries with the massive spending we have on our hands? Seems to me that’s an important side of the equation not being discussed in the video. Can the Fed keep up with Congress?
AKA: Inflation.
And runaway inflation is not a good thing. Hint: Germany after WWI.
Completely the wrong thing to do. Instead of buying notes and bonds, the Fed should be selling 30 year bonds at 3.5% to 4% in order to lock in low cost financing of the budget deficit.
Instead, they clearly intend to pay off the debt with inflated dollars. The irony is that while the immediate effect may be somewhat lower interest rates, the long term effect will be interest rates back at 18% or higher. Some of us have seen this movie, and it does not have a happy ending.
There is no free lunch. We, and succeeding generations, are signed up for a very bad future.
Elections have consequences … and have for a very long time.
But if we’re headed for inflation ( prices and wages ), doesn’t it make sense for those who can afford it to buy property or equities now,
knowing that price levels will be inflated within a few years ?
Ok, so buying US Treasuries increases demand, so lowers their yield – but doesn’t Congress finance the deficit with Treasuries – hence increasing the supply of Tresuries with the massive spending we have on our hands? Seems to me that’s an important side of the equation not being discussed in the video. Can the Fed keep up with Congress?