It would be nice to see an interest rate above 2% on a bank CD.

BTW, Mr. Duff, Moody and Poor knocked Japan’s rating down to nothing, and it had no effect on their ability to sell bonds. Argentina defaulted, and they can borrow whatever they think they want.

It is only the poor schlubs like Ireland and Greece who bought into the lure of the Euro, who have have problems selling bonds. They sold their souls to the European Central Bank and are paying the price.

BTW, here’s the interest rates those evil bond vigilantes are forcing upon the United States Treasury, as of the last Treasury auction:

Treasury securities
This week Month ago Year ago
One-Year Treasury Constant Maturity 0.24 0.23 0.44
91-day T-bill auction avg disc rate 0.060 0.095 0.145
182-day T-bill auction avg disc rate 0.110 0.150 0.220
Two-Year Treasury Constant Maturity 0.77 0.61 1.05
Five-Year Treasury Constant Maturity 2.22 1.95 2.57
Ten-Year Treasury Constant Maturity 3.51 3.29 3.85
One-Year CMT (Monthly) 0.26 0.29 0.40
One-Year MTA 0.295 0.307 0.421

Looks like ten-year Treasuries and five-year Treasuries are the best bet right now. But interest rates on *all* Treasuries are lower today than they were a year ago.

Yeah, those bond vigilantes are really rampin’ up, eh? 😈

– Badtux the Snarky Penguin

People are hoarding US Treasury bonds the same way they are hoarding gold, but you would understand that if you had bothered to look at the “paradox of thrift”, which explains that everyone is hoarding.

Another thing you don’t know is that you need some inflation to convince people to spend money. At the moment investors expect deflation, so they are spending. If they expect inflation, they will spend now to maximize the value of their money.

It is all basic stuff that was known decades ago, before politicians assumed they could reshape economics with ideology.

If you want to know what is going on in the economy and why austerity is an incredibly stupid thing to do at this point, in this economy, in this universe, look at the meaning of: paradox of thrift, fallacy of composition, liquidity trap, zero lower bound, and aggregate demand.

When business is sitting on a couple of trillion dollars in cash and no one is borrowing with interest rates near zero, the economy won’t move. No one is going to invest or spend until they see an increase in demand. Until there are jobs, there will be no increase in demand.

Oil prices have soared, and demand for oil has tanked, because people won’t spend the money.

The only way to break the cycle is for a major increase in demand, and the only entity capable of generating that demand is national government of a country with a fiat currency.

I hope you like recessions, but the UK is about to have another one because of the austerians.

BTW, the world economy is $74T or so, of which roughly half is dollarized either explicitly or implicitly. Printing $2T/year to purchase *every* U.S. Treasury bond that expires in a year would result in a 5.4% global inflation rate in the Dollarzone — not desirable, but hardly Weimar-worthy. Of course, the notion that the Federal Reserve would have to purchase *every* U.S. Treasury bond that expires in a year in order to prevent sovereign default is laughable, they’d simply have to purchase sufficient bonds to make it clear they *could* do so and thus drive the interest rates back down to reasonable levels, but that just makes the Dufferverse even more unrealistic compared to the real universe that the rest of us live in…

– Badtux the Snarky Economics Penguin

Not in this universe, of course. But conservatives (and S&P) don’t live in this universe, they live in an imaginary one of their own making, where wishful thinking substitutes for facts and talking points substitute for thought. Because, y’know, facts have a liberal bias :twisted:.

– Badtux the Snarky Penguin

Standard & Poors rated the junk bonds based on mortgage securities as investment grade and currently has less credibility than you do with anyone seriously involved with the real world.

The UK spends less than half as much as the US for health care per capita and gets the same or better results. Why should the US pay more than twice what you do – to give huge salaries to insurance executives?

You are entitled to your opinion, but you don’t get your own facts.

But even at a combined 38% for pensions, Medicare, and general government spending, the U.S. is far from being at a level of unsustainability. The Scandinavians ran over 50% of GDP as government spending for decades and as far as I can tell nothing bad has happened to them other than long life, gorgeous modern cities, lots of mobile phones, and a surplus of beautiful women (hmm…..). Clearly, though, health care spending has to be reined in or it’ll keep consuming more and more of GDP, and since Medicare/Medicaid/other govt programs is 50% of healthcare spending, that goes directly to the bottom line… but Bryan already pointed out at least one way to do that, and the PelosiReidRomneyCare(*) bill has two other cost control items in it (comparative effectiveness studies to see what treatments really work and which are just a drag on the Medicare budget, and chopping the Medicare Advantage pork to be closer to the true cost of providing healthcare rather than a giveaway to private healthcare providers).

BTW, I notice that Mr. Duff hasn’t told us which granny he wants thrown under the bus in order to save on Medicare costs… he certainly hasn’t told us any *other* way he would save on Medicare costs other than throwing Granny under the bus. Funny how that works, eh?

– Badtux the Numbers Penguin
(*)I call it the PelosiReidRomneyCare bill because Obama had nothing to do with its fashioning and it more resembles Mitt Romney’s Massachusetts RomneyCare system than anything Obama proposed during his campaign.

They want to shift the burden from income taxes to withholding taxes, and default on the Social Security Trust Fund. That has been the plan since they started talking about “privatizing Social Security”. If Wall Street can’t steal the money one way, they’ll try another. They always go for the pension funds.

– Badtux the Numbers Penguin