Friday, July 31, 2009

Weak Treasury Sales...Bond Vigilantes Rolling Into Town?

Anyone want to puchase debt at an artificially low interest rate from a party that's highly unlikely to be able to pay you back? Anyone?

Surprisingly...you're not alone! The Treasury auctioned off another $39 billion last Wednesday (it's crazy that we get immune to seeing these huge numbers) in an auction that "drew poor demand."

It really looks like the government will have to monetize a lot of debt (as previously laid out in an excellent guest article we ran a few months ago - link below).

Heavy monetization usually leads to inflation. Problem is, the inflation/hyperinflation call appears to be the most obvious one on the planet right now. And the obvious call is often not what plays out in the world of investing.

So can the Fed inflate its way out of this? Or is Robert Prechter correct that you can't beat deflation in a credit based system?

Further reading on this topic:

No comments:

Most Popular Articles This Month