Why are U.S. Treasury rates so low compared to inflation background?
The PPI has been increasing by over 6.2% annualized for the recent past 6 months and yet all U.S. treasuries are squashy significantly less than the PPI, or even the CPI. What are the main cause of this conundrum? To what extent does this phenomenon have anything to do with the dollar/yuan peg?
Answers: I'd say aloud one reason is that many investors who owned stocks saw the discount starting to weaken since the sub prime crisis last summer, and own been selling stocks and buying US treasuries because of their perceived safeness. The more they buy, the more that drives up the price, which then drives down the yeild on Tbills.
first rotten if you want a good inflation measure I would move about with M3, it measures everything. the reason why we own terrible interest rates is because the Federal Funds rate is very low. To my skill this has nothing to do beside foregin currencies, it is purely a domestic issue. Im not sure why people haven't looked for the past few years but Treasury summary have actually be yielding LESS than inflation. It has to do beside the sub-prime crisis. The Fed has decided to increase the money supply to augment liquidity in order to avoid the total muddle of a Wall Street melt down noble reason), as very well as save their friends in investment bank (less noble reason)
The Fed realizes that this will lead to inflation, but decided that it doesn't care because the liquidity issue is a more far-reaching problem.
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Answers: I'd say aloud one reason is that many investors who owned stocks saw the discount starting to weaken since the sub prime crisis last summer, and own been selling stocks and buying US treasuries because of their perceived safeness. The more they buy, the more that drives up the price, which then drives down the yeild on Tbills.
first rotten if you want a good inflation measure I would move about with M3, it measures everything. the reason why we own terrible interest rates is because the Federal Funds rate is very low. To my skill this has nothing to do beside foregin currencies, it is purely a domestic issue. Im not sure why people haven't looked for the past few years but Treasury summary have actually be yielding LESS than inflation. It has to do beside the sub-prime crisis. The Fed has decided to increase the money supply to augment liquidity in order to avoid the total muddle of a Wall Street melt down noble reason), as very well as save their friends in investment bank (less noble reason)
The Fed realizes that this will lead to inflation, but decided that it doesn't care because the liquidity issue is a more far-reaching problem.