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But the cost of borrowing will go through the roof because the market knows the bad stuff will happen. So nobody is going to buy treasuries without a significa
by MattPalmer1086 1y ago
But the cost of borrowing will go through the roof because the market knows the bad stuff will happen. So nobody is going to buy treasuries without a significant increase in return.
- Buttons840 1y agoYes, the cost of borrowing for the government will go through the roof. The Fed will drop interest rates, this will make borrowing easy, people in the economy can get easy money. Inflation will rise, which makes borrowing even easier, because any debt is just inflated away. People will want to hold assets that can't be devalued by inflation, which means people will not want to hold government bonds unless the US pays a high interest rate on those bonds, and when the US government pays a high interest rate on its bonds. So, we would expect the stock market to increase temporarily, and people will want to buy that increase. The long-term bond market would tank because people would know nobody will want to hold US bonds. Overall it would be a very schizophrenic market.