Saturday, October 16, 2010

Long Bond Fears Inflation

The Treasury 30-year bond yield rose above 4 percent yesterday for the first time in two months, after Fed Chairman Ben Bernanke said in a speech that a little inflation is not a bad thing.

Further, the U.S. sold $66 billion of notes and bonds to lower-than-average demand, this last week.This is another reason Bernanke is coming with QE2. Bernanke knows that with the debt that Federal, states and local governments have to deal with, debasing the currency is the sneakiest way to get money in the hands of governments that will allow them to pay off their debts in cheap dollars---thus screwing the debt holders.


  1. Wenzel,

    How does inflation solve the UST's debt problems when they have $1.7T in bills?

  2. If you print a trillion in super money with, say, a multipler of 3, that is a huge amount of new money in the system, much of which will find its way into tax coffers.

    And who is to say the Fed will stop at a trillion.