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Treasury yields are way down right now. I'm not an economic expert and don't really know what to make of that. It seems crazy that people are willing to loan

by elihu 7y ago

Treasury yields are way down right now. I'm not an economic expert and don't really know what to make of that. It seems crazy that people are willing to loan money to the U.S. government for 30 years at a rate of 1.25%. As a taxpayer I guess I can be cautiously happy that the government will incur less interest on its debt for now. https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield https://www.treasury.gov/resource-center/data-chart-center/i...

jotakami 7y ago
In the modern financial system, risk-free debt is basically as good as cash on a balance sheet. If you need to turn it into cash, you just dip into the repo (“repurchase agreement”) market. Over the past few decades the global financial system has steadily become completely unrecognizable from the standpoint of classical economics. Debt is not debt, savings is not savings, and printing money is no big deal (or so they say).
- deleted 7y ago
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- toomuchtodo 7y ago
  > In the modern financial system, risk-free debt is basically as good as cash on a balance sheet. If you need to turn it into cash, you just dip into the repo (“repurchase agreement”) market. The global repo market is valued at $12T USD, and only 75% of it is backed by "pristine collateral", such as government bonds. That means that $3T of it is in equities or derivatives. The fed's balance sheet is only $4T USD in comparison. Additionally, $.5T is in private capital groups, which are entirely opaque, have poor lending standards, and there's no visibility into counterparties or volume. Keep in mind, India's Yes bank that was just nationalized failed due to liquidity problems. There is a theory that global liquidity is being challenged, and central banks may not have the appetite to provide a backstop at the volume required.
bhl 7y ago
Aren’t short term yields in Germany and Japan negative right now? Positive returns on a global scale is hard to come by.

by elihu 7y ago

jotakami 7y ago

In the modern financial system, risk-free debt is basically as good as cash on a balance sheet. If you need to turn it into cash, you just dip into the repo (“repurchase agreement”) market. Over the past few decades the global financial system has steadily become completely unrecognizable from the standpoint of classical economics. Debt is not debt, savings is not savings, and printing money is no big deal (or so they say).

deleted 7y ago
[deleted]
toomuchtodo 7y ago
> In the modern financial system, risk-free debt is basically as good as cash on a balance sheet. If you need to turn it into cash, you just dip into the repo (“repurchase agreement”) market. The global repo market is valued at $12T USD, and only 75% of it is backed by "pristine collateral", such as government bonds. That means that $3T of it is in equities or derivatives. The fed's balance sheet is only $4T USD in comparison. Additionally, $.5T is in private capital groups, which are entirely opaque, have poor lending standards, and there's no visibility into counterparties or volume. Keep in mind, India's Yes bank that was just nationalized failed due to liquidity problems. There is a theory that global liquidity is being challenged, and central banks may not have the appetite to provide a backstop at the volume required.

bhl 7y ago

Aren’t short term yields in Germany and Japan negative right now? Positive returns on a global scale is hard to come by.