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I respectfully disagree with a key point of John Burns argument.
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Posted 11/25/2012 12:41 (#2715972 - in reply to #2715697)
Subject: Well I think we agree that..

"negative interest rates will not last.."

for a number of reasons.

So we've just gone through a period that PAID Debtholders to buy upon credit.. aka Borrow against SOMETHING and pay it back with a negative interest rate.

As one Wayne Gretzke would say.. "It ain't where the pucks' been.. it's where it's going.. that matters."

SO where are REAL interest rates headed (at some point) ???

obviously HIGHER than they are now...  When..??

What will that do to land values..?
to commodity prices..?
to those who are levered up on debt..???

Flip side.. EVERYONE including the US Government is in THAT boat.. so.. we have powerful allies on our side.. but WE ALL MUST make REAL PROGRESS on getting out of that boat... before it sinks.

Again.. I acknowledge that you guys HAVE been correct.. okay I'll concede.. "not going to end well."  But that itself is not solely justification enough for ever rising PM's and Commodities.. and a continuation of the status quo.. it's a dynamic world.

Furthermore, what OTHER choices do buyers of bonds have??  It's not like we're financing and building a LOT of NEW HOMES right now..  Would you prefer European debt?  Part of what you need to acknowledge in this debt trap is that it's also a Credit trap.  Great.. we're not going to do MBS anymore... so what now?  Is US Gov' debt the Only game in town...???

WHEN the FED wants to start kicking people off commodities.. they will bring the heat.. just look at history.. THAT is WHY  PAUL VOLKER brought out his fast ball.

You know everyone basically watched the Dust Bowl on PBS this past week.. IF we all FARMED like they did back then.. burning the stubble after harvest.. then dragging a one way plow across it anytime a weed sprouted THEN YES we would look like it did back  

HOWEVER, (hopefully) the Children and Grand Children of THAT GENERATION LEARNED from the experience.. much like our Fed has learned.. (wish I could say the same about the legislative side...) so MAYBE it's not going to be THAT BAD THIS TIME...???

"This time it's different.."

I guess on numerous fronts we are going to test that out.. Have the Billions spent upon Education both in Agronomy and Economics been worth ANYTHING... over the past 75 years.

I guess we'll find out.

later.. got to go add to the shopping pandamonium.

edit add: btw looking at your expanded Fed Balance sheet chart.. that's the big rub.. you think they will add MORE on TOP of what they have already injected.. which if THEY DID.. even I agree that the US dollar would become toilet paper.. However, I believe that even Ben Bernanke himself gets that..  I on the other hand see the Fed.. slowing it's purchasing.. aka as bonds are paid off and RE-Invested.. at a decreasing rate.. the Fed's Balance sheet comes down.. your own chart shows that it has/is occuring.. They were only able to blow it up because the velocity of Money collapsed.. from what I am hearing and seeing.. that is not the case going forward.

From your own chart.. WHY has the balance sheet NOT expanded over the PAST YEAR???

Again.. enjoy the discussion.. and admitting that you guys HAVE been correct.. just asking how much longer that will be the case..

Edited by JonSCKs 11/25/2012 13:02
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