Comments on: Some Praise and Questions for the US Treasury http://alephblog.com/2009/10/28/some-praise-and-questions-for-the-us-treasury/ Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control Thu, 18 Mar 2010 13:31:18 -0400 http://wordpress.org/?v=2.8.4 hourly 1 By: But What do I Know? http://alephblog.com/2009/10/28/some-praise-and-questions-for-the-us-treasury/comment-page-1/#comment-23597 But What do I Know? Fri, 30 Oct 2009 12:45:24 +0000 http://alephblog.com/?p=2108#comment-23597 Trenchant comments, David. I would like to pick a couple of nits, however. In regards to the Treasury lenghtening maturities, my cynical side whispers that this is Geithner's way of playing chicken with the Fed, to force them to begin QE 2. If the ten and thirty year rates shoot up, won't Uncle Ben feel compelled to muscle them down again? Look at it this way--it's like your ne'er-do-well brother-in-law demonstrating his fiscal responsibility by promising to pay you interest on a long-term loan as opposed to simply hitting you up for money every payday. Do you really feel better about the former? I think the flows from Social Security have already reversed, and absent a tax increase or benefit cut or a miraculous recovery in employment (guess which one we're hoping for) will stay that way. Trenchant comments, David. I would like to pick a couple of nits, however.

In regards to the Treasury lenghtening maturities, my cynical side whispers that this is Geithner’s way of playing chicken with the Fed, to force them to begin QE 2. If the ten and thirty year rates shoot up, won’t Uncle Ben feel compelled to muscle them down again? Look at it this way–it’s like your ne’er-do-well brother-in-law demonstrating his fiscal responsibility by promising to pay you interest on a long-term loan as opposed to simply hitting you up for money every payday. Do you really feel better about the former?

I think the flows from Social Security have already reversed, and absent a tax increase or benefit cut or a miraculous recovery in employment (guess which one we’re hoping for) will stay that way.

]]> By: IF http://alephblog.com/2009/10/28/some-praise-and-questions-for-the-us-treasury/comment-page-1/#comment-23594 IF Wed, 28 Oct 2009 19:19:00 +0000 http://alephblog.com/?p=2108#comment-23594 Good observations, as usual. I am actually one of the buyers of 30 year zeros. In moderation and only federally backed entities. I've observed the same 20 year peak, which is a bit bothersome. It was less pronounced a while ago, but can still be observed abroad with Bunds. A bit of lengthening seems to benefit everyone. Increase it too much and I would be afraid that the feds are planing to monetize the debt. Walking a fine line... Good observations, as usual. I am actually one of the buyers of 30 year zeros. In moderation and only federally backed entities. I’ve observed the same 20 year peak, which is a bit bothersome. It was less pronounced a while ago, but can still be observed abroad with Bunds. A bit of lengthening seems to benefit everyone. Increase it too much and I would be afraid that the feds are planing to monetize the debt. Walking a fine line…

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