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To be completely fair, there exists a justification for (at least some of) the action we're seeing: if developed economies' bond yields are correctly pricing in
by H8crilA 6y ago
To be completely fair, there exists a justification for (at least some of) the action we're seeing: if developed economies' bond yields are correctly pricing in future nominal gdp, i.e. we will not be back to good times for the next 30-50 years, then owning anything that can grow is tremendously valuable. But it's such a stretch to assume 30-50 years of stagnation, even if the entire bond market agrees with you. I mean do you seriously expect property relationships to not be rewritten in some revolutionary way somewhere along the way if we get 30-50 years of misery?
- octoberfranklin 6y ago> If developed economies' bond yields are correctly pricing in Bwahahahahaha.... Oh wait I fell of my chair laughing.
- H8crilA 6y ago:) I feel you, but I do have some respect for the markets no matter what they say. At least enough respect to be cognizant of what is being priced in, despite my personal views.
- octoberfranklin 6y agoOh come on, soverign debt is about as far from being "a market" as possible.... I'll believe the yields mean something when the US Treasury issues a special series of bonds that are forbidden to be owned by the Fed or any entity with access to the discount window.
- busterarm 6y agoThe benefit of a large, well-equipped military is that you get to tell people whether or not you're/they're going to pay your/their debts. For as long as your population is willing to pay for its prosperity in blood.
- H8crilA 6y agoThere's a lot of countries with lower nominal yields that are not known for their military prowess ... like Greece. Yes, greek bonds have negative yields.
- busterarm 6y agoGreece has the miliary power of the entire fucking European Union (and its allies) behind them, for as long as they're willing to suffer for the benefit of France and Germany.
- busterarm 6y agoThat's really just the Disco Stu Fallacy of economics at play. Assuming that things _will_ get better and passing the buck onto your descendants is madness. Also how much growth has been stunted by the weight of ancestral spending? Birth rates are declining and the cost of maintaining our infrastructure is at the point in most high-GDP locations (New York, California, etc) where obligations cannot be met and credit status changes were inevitable _before_ Coronavirus. Look at the insanity New Jersey has gone through with the criminal pilfering of infrastructure/development funds to pay pensions (aka, Christine Todd Whitman should have gone to jail). We're looking at cascading failures in a complex system. Nobody can see enough of the picture to predict what's next or realize that it's already dead. To assume that we'll right the trend with growth will most likely require either war or (a technical) revolution.
- pavlov 6y agoThe funny thing about the Disco Stu Fallacy is that Stu was right in the long run. Disco music in various forms is immensely popular today. It dominates global streaming charts. Rock is the loser. Stu was just an early adopter facing the through of disillusionment.
- busterarm 6y agoSure, but none of that music is called Disco and his bet was still a losing one. :)
- pavlov 6y agoKylie Minogue released a top-selling album last week that's literally named "Disco".
- busterarm 6y agoHow long do you hold the losing investment from 1976? It took decades for the industry side of Disco music to recover from Disco Demolition Night. Italo and Hi-NRG notwithstanding. The music might have stayed four on the floor but the names and the people all changed. Also Kylie Minogue doesn't set trends, she rides them. Most of us realized Disco was still alive 10 years ago.