Comments on: This just proves most investors are stupid

By: Dave

Dave — Thu, 11 Aug 2011 16:23:42 +0000

Ah, the great deflation bugaboo. All I know is, it’s really hard for me to envision our economy going into a period of deflation anytime soon, what with the price of everything shooting up pretty much across the board and the Federal Reserve printing money hand over fist (which can do nothing but cause price inflation and is, according to some economists, the only real definition of inflation anyhow.)

The people who hate deflation are debtors, because they have to repay today’s loan amount in tomorrows dollars, which stand to be a good deal more valuable than they are today (the opposite is true during times of inflation.). And the US Government is the biggest debtor the world has ever known, so of course they do everything they can to avoid it.

By: wintermute

wintermute — Thu, 11 Aug 2011 10:30:03 +0000

Not that I know anything about economics, but this doesn’t seem entirely silly:

http://www.salon.com/news/opinion/glenn_greenwald/2011/08/10/treasury_bonds/index.html

By: Darien

Darien — Mon, 08 Aug 2011 22:13:18 +0000

Oh, also. Did you just say “different to?” You forfeit all future opportunities to make fun of me for spelling colour with a u.

By: Darien

Darien — Mon, 08 Aug 2011 21:05:43 +0000

On the other hand, S&P's downgrade didn't really mean what it "should" mean. Everybody's known for years that the US will default on its debt, either honestly or via the dishonest means of just printing a whole shitstorm of money and paying it off in dollars that aren't worth anything. So the investors are perhaps speculating -- trying to wring a last blast of value out of t-bills before they go in the tank. Which still seems odd, but less odd than flocking to t-bills as a hedge against t-bills falling. Here's Bob Wenzel Wenzelizing about the whole affair.