{"id":24115,"date":"2017-06-10T17:40:34","date_gmt":"2017-06-10T22:40:34","guid":{"rendered":"http:\/\/olduvai.ca\/?p=24115"},"modified":"2017-06-10T17:42:21","modified_gmt":"2017-06-10T22:42:21","slug":"the-three-headed-debt-monster-thats-going-to-ravage-the-economy","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=24115","title":{"rendered":"The Three Headed Debt Monster That\u2019s Going to Ravage the Economy"},"content":{"rendered":"
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The Three Headed Debt Monster That\u2019s Going to Ravage the Economy <\/a><\/h3>\n<\/div>\n
Mass Infusions of New Credit<\/strong><\/div>\n
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\u201cThe bank is something more than men, I tell you.\u00a0 It\u2019s the monster.\u00a0 Men made it, but they can\u2019t control it.\u201d <\/em>\u2013 John Steinbeck, The Grapes of Wrath<\/p><\/blockquote>\n

Something strange and somewhat senseless happened this week.\u00a0On Tuesday, the price of gold jumped over $13 per ounce.\u00a0 This, in itself, is nothing too remarkable.\u00a0 However, at precisely the same time gold was jumping, the yield on the 10-Year Treasury note was slip sliding down to 2.15 percent.<\/p>\n

\"\"In short, investors were simultaneously anticipating inflation and deflation.\u00a0 Naturally, this is a gross oversimplification.\u00a0 But it does make the point that something peculiar is going on with these markets.<\/p>\n

Clear thinking and simple logic won\u2019t make heads or tails of things.\u00a0 For example, late Wednesday and then into Thursday the reverse happened.\u00a0 Gold gave back practically all $13 per ounce it had gained on Tuesday, while the yield on the 10-Year Treasury note climbed back up to 2.19 percent.\u00a0 What to make of it?<\/p>\n

\"\"<\/a>Gold and treasury yields have been inversely correlated for some time. This is probably due to inflation expectations driving expectations about interest rate policy \u2013 click to enlarge.<\/p>\n

With a little imagination one can conceive of where the money\u2019s coming from to buy Treasury bonds.\u00a0 More than likely, it has something to do with central bank intervention into credit markets.\u00a0 Though, the Federal Reserve is not the only culprit.<\/p>\n

If you recall, the Federal Reserve\u2019s quantitative easing program concluded in late 2014.\u00a0 The Fed even says it plans to start shrinking its balance sheet later this year.\u00a0 So if the Fed\u2019s not the source of liquidity for Treasury purchases, who is?<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Three Headed Debt Monster That\u2019s Going to Ravage the Economy Mass Infusions of New Credit \u201cThe bank is something more than men, I tell you.\u00a0 It\u2019s the monster.\u00a0 Men made it, but they can\u2019t control it.\u201d \u2013 John Steinbeck, The Grapes of Wrath Something strange and somewhat senseless happened this week.\u00a0On Tuesday, the price […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5728,175,3995,195,303,11763,2615,662,3650],"class_list":["post-24115","post","type-post","status-publish","format-standard","hentry","category-economics","tag-acting-man","tag-credit","tag-credit-markets","tag-debt","tag-fed","tag-mn-gordon","tag-peoples-bank-of-china","tag-quantitative-easing","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24115","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=24115"}],"version-history":[{"count":3,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24115\/revisions"}],"predecessor-version":[{"id":24118,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24115\/revisions\/24118"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=24115"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=24115"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=24115"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}