Gamesmith94134: How Scary Is the Bond Market?

If you can believe the next ten year, inflation would remain in the 2% range and you will gain 0.25% on what your bond paid now; then you would also understand the dollar will also depreciate at a rate the fits the theory. Perhaps, there are deposit charges in banking for the large sum of money now; that no banker can guarantee the outcome on the deposit can sustain the same value or adequate exchange on the currency you deposited, or the bond can be retrieved on a concurrent condition since currency do fluctuate even for dollar.

Perhaps, we look into the current cases in depreciation on Russian ruble and Venezuelan bolivars when the agreement to the exchange on dollar after default. It raised the question on the fiduciary duty of the FED, and IMF that the exchange rate was not equivocally sound since the demand by values on the ruble and bolivars are limited or even lopsided on the scarcity of supply on the dollar. We blamed on the corporate sovereigns distinctively choose creditors over debtors currencies, for which, dollar won its liquidity trap over both rubles and bolivars lost their values from defaults; because the system demands dollar as the primal reserves currency. It is because it had created its hierarchy monetary system that price and value is imbalanced and not guaranteed. It is why many started to contemplate on the equal treatment on the TIPP, TPP and CETA, that is no longer as supply and demand in the exchange system or the currency system; now even the French demands a World Bank's Multilateral Investment Guarantee Agency resolution in dealing with investment funds and sovereign funds in a respective demands.



Based on the CONSUMER PRICE INDEX - JANUARY 2015,

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.7 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index decreased 0.1 percent before seasonal adjustment.

Moreover, the trade association reports that “the average size of purchase loans began to outpace the recovery in home prices in September 2011. By December 2014, according to the group’s weekly mortgage application survey, the average purchase loan amount had risen by nearly 32 percent. The average for the week ending March 6 was $294,900, a record high. In other words, the average purchase loan now exceeds levels reached before the recession when home prices soared to unsustainable heights.”

It gave a chill to the spine that the primal currency reserve like dollar is be devalued by performance and the FED is willing to downgrade dollar for Import –export to bring in revenues for its $483 billion trade deficits. Perhaps, the foreigner or sovereign would wonder if their calculations on the average of the last 18 quarters of inflation and the last 18 quarters of short-term real interest rates are undermined by the low rate and QE; and how much other currencies reserves are available in the FED if demanded.



I am sure US will not be bankrupted, if it can print---fiat money or not; or appreciation of other currency may occur; but TARP does cast a shadow on 2007 in the “too big to fall” theory. Like I said, what if deflation occurs, or all American will inherit all the dollars we printed?



May the Buddha bless you?

