Tim Price

When Will the Music Stop for Government Bonds?

What's so wrong about intellectual respect for someone worthy of it ? Better, surely, than respect - of any kind - for the banksters and politicians who collectively landed us in this unholy mess. And the exquisite irony is that Mises seems to have suffered the fate of the prophet wholly unloved in his own land. As I tried to make clear, there's the world as it would be under the Austrian School - and the world we actually inhabit. But we can at least dream..


On Jul 30 10:36 AM Ferdinand E. Banks wrote:

> There it is again - adoration of von Mises. Hmm. I begain teaching
> economics in the l960s. I held professorships in a dozen universities,
> probably went to hundreds of seminars presided over by persons from
> every country and corner of the political spectrum, some of them
> brilliant and some hopeless, and read I dont know how many hundred
> articles dealing with macro in 'learned' journals. And so on and
> so forth. I don't remember a single mention of von Mises - although
> I'm sure that there must have been one from the windbags holding
> forth at some of these meetings, and also don't remember any of my
> students wasting my time with talk about 'Austrians'.
>
> Now I hear about him all the time. Of course they might have been
> talking about him at the Club Rendezvous in Vienna's Graben when
> I was in the American army and occasionally visited the place, although
> for the most part I wasn't in condition to know..

When Will the Music Stop for Government Bonds?

A nice idea, but the maths doesn't look like it will work. According to Eric Sprott's data, private ownership of Treasuries is entirely dwarfed by intragovernmental holdings (42% of the market) and foreign holders (28%). Mutual funds come in at just 6% and private pension funds at 3%. I doubt if there is any way on earth that private individuals could possibly replace international institutions. I agree that private savings will and should rise, but there will likely be much better places to park those savings than in return free risk assets such as US Treasury bonds.


On Jul 30 04:14 AM Nick36 wrote:

> Perhaps people in USA will increase their saving rate a lot due to
> lack of economic growth. And they will keep buying US government
> bonds for the foreseeable future. Which might mean that the collapse
> of US bond prices might be a very long way away.
>
> Japan is a good example of that. The Japanese government keeps issuing
> even more government bonds relative to their GDP than USA has been
> issuing until now. And their bond prices aren't collapsing because
> Japanese citizens are saving their earnings like crazy and buying
> Japanese government bonds.
>
> When a country relies on foreigners to fund its deficits. Then such
> funding is insecure. But if the country's own citizens begin to
> save more and buy more of their government bonds. Then such funding
> is secure for as long as the people keep saving. This won't last
> forever. But domestic savers will probably keep buying US government
> bonds longer than foreign investors would.