Sunday, September 07, 2008

Just wondering

Is the demand curve for US debt perfectly elastic? Or was GSE debt already assumed in markets to been part of the supply of US debt? Or are we going to see Treasury yields materially rise this week?


Anonymous said...

As long as the People's Bank of China feels the need to support the renembi within a fairly tight band, then I think the demand curve for US treasuries will continue to be pretty close to elastic.

Anonymous said...

China et al create new renminbi to purchase dollars, which causes domestic inflation. China et al can only extract so many resources from their citizens via money expansion induced inflation. At some point, Zimbabwe like inflation will destroy their economies. Many foreign citizens are already getting tired of inflation reducing their standard of living just to support US borrowing.

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