When Will Rates Rise?

Thrugelmir

Talking to yourself Hamish.......:rotfl:

HAMISH_MCTAVISH

MortgageAnxiety wrote: »

If that happens the US either defaults or goes into MASSIVE QE. They will presumably do the latter first, causing inflation and interest rates to be forced up?

That's the same logic you used to spout under your previous ID's, when telling people to buy silver, right before it crashed by 50%.

MortgageAnxiety

Not me, but interested in the post if you can direct me to it?

I do plan to buy gold!

Does this logic not work then? If it doesn't can you please save me a fortune.

Again appreciated.

Linton

MortgageAnxiety wrote: »

While I don't doubt you know your stuff, can you please explain further?

The US now has so much debt that it cannot possibly pay it back. If they cannot pay it back then 'someone' has to buy that debt. If China, Japan, Europe decide that that is a high risk debt then they won't buy it. If that happens the US either defaults or goes into MASSIVE QE. They will presumably do the latter first, causing inflation and interest rates to be forced up?

I expect the US bills to come onto hard in 2014 and I also expect Hellen to print faster then Bernanke.

What are your thoughts on this?

The US doesnt need to pay it all back. All it needs to do is to afford the costs of taking on new fixed, and currently low, interest debt to pay back the old high interest debt as it matures. So now is the time to borrow more. The strength and size of the US economy ensures that the risk is small or at least smaller than for many other places where the cash rich nations of the world could deposit their money. Actually thinking about it, the US is perhaps the only place big enough to take in all that spare cash. Where would it go if it wasnt ploughed back into the US?

Of course in the long term it could well end in tears, but, as Keynes pointed out, in the long term we are all dead.

MortgageAnxiety

Hamish for an intelligent guy you have got me completely wrong.

HAMISH_MCTAVISH

MortgageAnxiety wrote: »

I do plan to buy gold!

Does this logic not work then? If it doesn't can you please save me a fortune.
.

I can tell you how to save a fortune...

-Don't buy a house for your landlord as well as one for yourself.

I can also tell you how to make a small fortune....

- Start out with a large fortune and invest in zero yield, depreciating commodities like Gold or Silver.

HAMISH_MCTAVISH

MortgageAnxiety wrote: »

Hamish for an intelligent guy you have got me completely wrong.

Apologies, I'd forgotten about your earlier PM.

We get bombarded with new user ID's on this board, that have fallen for the youtube "end of the world is nigh" spiel, and promote risky investment in commodities. Usually following the same misguided logic about QE and government debt.

Hang on a minute and I'll answer your post.

MortgageAnxiety

Linton wrote: »

The US doesnt need to pay it all back. All it needs to do is to afford the costs of taking on new fixed, and currently low, interest debt to pay back the old high interest debt as it matures. So now is the time to borrow more. The strength and size of the US economy ensures that the risk is small or at least smaller than for many other places where the cash rich nations of the world could deposit their money. Actually thinking about it, the US is perhaps the only place big enough to take in all that spare cash. Where would it go if it wasnt ploughed back into the US?

Of course in the long term it could well end in tears, but, as Keynes pointed out, in the long term we are all dead.

Thanks Linton -

Hasn't China become the global superpower?

My head is spinning with this.

Too many views and too much YouTube quite possibly.

I don't see the economy as recovering here or in the US, but this is what has been fed to me by - Peter Schiff, Larry Edelson and others.

I am not an economist.

I WAS planning on fixing my mortgage for 10 years and buying gold mines, with a view that the US would default OR raise QE.

Now I am just confused.

HAMISH_MCTAVISH

MortgageAnxiety wrote: »

The US now has so much debt that it cannot possibly pay it back.

Nobody expects any nation state to pay back all the debt all at once.

It's always going to be a revolving credit facility, where the oldest debt is retired and newer debt replaces it.

And in an inflationary monetary system, you expect that for debt to stay constant as a percentage of GDP, you'll see massive increases in nominal debt amounts over time.

If they cannot pay it back then 'someone' has to buy that debt. If China, Japan, Europe decide that that is a high risk debt then they won't buy it. If that happens the US either defaults or goes into MASSIVE QE. They will presumably do the latter first, causing inflation and interest rates to be forced up?

See above.

Debt levels as a percentage of GDP fluctuate immensely with the economic cycle.

They're high at the moment, but they've been higher in the past, and will be both lower and higher in the future.

I expect the US bills to come onto hard in 2014 and I also expect Hellen to print faster then Bernanke.

What are your thoughts on this?

I expect we'll see QE taper as the recovery strengthens.

And end when money supply growth is back to more normal levels.

The US deficit is reducing and will be brought under control through growth increasing faster than borrowing. The UK deficit is now following a similar trajectory.

And finally, always remember that a very significant proportion of total debt is owed by the US to itself. The same is true in the UK.

You can't really default when the counterparty is you...

MortgageAnxiety

HAMISH_MCTAVISH wrote: »

Apologies, I'd forgotten about your earlier PM.

We get bombarded with new user ID's on this board, that have fallen for the youtube "end of the world is nigh" spiel, and promote risky investment in commodities. Usually following the same misguided logic about QE and government debt.

Hang on a minute and I'll answer your post.

I am sure, YouTube is littered with doomsday scenarios. And I have bought into them.

P.s - I was not advocating buying gold itself, I am looking at gold mines for gearing, THIS is a failing strategy if gold is NOT going to rise.