f*******e
发帖数: 1300 | | N********n
发帖数: 8363 | 2
Interest rate will have to go tremendously high to attract any kind of
buyers but then if government already carries too much short-term debt
(13Ts in Obama's case) they cannot afford to pay high interest rate.
If government raises rate, they cannot afford the interest payment so
they go bankrupted. But if they don't, there'll be no one to their bonds
to finance the spending so they still go bankrupted.
Either way US will have to default on the debt or hyperinflate it away.
【在 f*******e 的大作中提到】
: 1。已经预期到的高通胀
: 2。未预期到的高通胀
| l******c
发帖数: 2555 | 3 if FED buys the debt directly, what's the effect?
I believe in China, central bank often "send" money to centeral government
directly. | N********n
发帖数: 8363 | 4
Mass inflation. The other bond holders will be so pissed off that they
start to sell in droves to shake the bond market. The selling will be
intensive enough that Treasury department may scream for a bailout.
We've seen how scary a market crash like Mar/09 looks like. Imagine bond
market, which is 10 times as big, runs into its own Mar/09 scenario.
【在 l******c 的大作中提到】
: if FED buys the debt directly, what's the effect?
: I believe in China, central bank often "send" money to centeral government
: directly.
| l******c
发帖数: 2555 | 5 Fed lends money to some bank with 0 interest, the bank buys bond to get div,
seems working fine now
【在 N********n 的大作中提到】
:
: Mass inflation. The other bond holders will be so pissed off that they
: start to sell in droves to shake the bond market. The selling will be
: intensive enough that Treasury department may scream for a bailout.
: We've seen how scary a market crash like Mar/09 looks like. Imagine bond
: market, which is 10 times as big, runs into its own Mar/09 scenario.
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