4% growth looking more like a reality. Link

[hoot1]

Huh? Government deficits are driving up interest rates or the Fed's tightening is? If it were deficits, you couldn't explain 2015, Japan, etc.

I wasn't referring to Fed rate hikes. My reference was to Treasury yields hikes required to attract investors to buy securities necessary to cover the deficits created by the recent tax cuts along with the huge deficit already in place..

Jamie, as you know, higher Treasury yield rates cause consumer and business loan rates to also rise.

 

[JamieDimonsBalls]

I wasn't referring to Fed rate hikes. My reference was to Treasury yields hikes required to attract investors to buy securities necessary to cover the deficits created by the recent tax cuts along with the huge deficit already in place..

Jamie, as you know, higher Treasury yield rates cause consumer and business loan rates to also rise.

That was my point. It's disingenuous to ignore the impact of Central Bank normalization. And, as I said, if markets were concerned about debt and deficits, how do you explain JGBs? Or prior bond market reactions where we saw rates creep higher without fiscal stimulus?

Central banks have more control and credibility than people realize, and for good reason.

 

[VanPastorMan]

So what? Again, what’s your point? Short term numbers are not a trend. It is a fact you will overlook virtually any lie, action, and rationalize and lie to others to support this buffoon so you have zero credibility. I guess if the economy does well it helps u con money out the gullible that show up to hear your nonsense. Great welfare scam for you I suppose, live off of others while you condem others who might need help.

Wow, just wow. Your personal attacks are screwed up. How do you know these are short term numbers? Are you happy about the current numbers? Do you hope they are long term?

 

[hoot1]

That was my point. It's disingenuous to ignore the impact of Central Bank normalization. And, as I said, if markets were concerned about debt and deficits, how do you explain JGBs? Or prior bond market reactions where we saw rates creep higher without fiscal stimulus?

Central banks have more control and credibility than people realize, and for good reason.

Explaining why the Japanese Government Bond rates are the lowest in the world, and given this, why I am concerned about our increasing government debts causing interest rates to escalate in both our government and private sectors is an interesting study.

Guess the easiest explanation involves the differences between Japan and the U.S, For starters, the Japanese are extremely nationalistic and homogeneous as compared to us. This adds up to Japanese citizens owning almost all of their own public debts even at rates barely above 1%, By contrast 45% of our federal debt is held by foreigners looking for less risk at a fairly high return. In addition the Japanese and their politicians accept GDP growth rates which would be unacceptable in the U.S. public square as can be seen for a couple of decades.

Jamie, admittedly I am focusing on fiscal policy and ignoring your point that the Federal Reserve and Central Bank through monetary policies can avert a problem created by our growing federal debt. My fear is the federal debt and failures of a fiscal debt responsibility is reaching a point where even sound monetary policies cannot save the day.

 

[JamieDimonsBalls]

Explaining why the Japanese Government Bond rates are the lowest in the world, and given this, why I am concerned about our increasing government debts causing interest rates to escalate in both our government and private sectors is an interesting study.

Guess the easiest explanation involves the differences between Japan and the U.S, For starters, the Japanese are extremely nationalistic and homogeneous as compared to us. This adds up to Japanese citizens owning almost all of their own public debts even at rates barely above 1%, By contrast 45% of our federal debt is held by foreigners looking for less risk at a fairly high return. In addition the Japanese and their politicians accept GDP growth rates which would be unacceptable in the U.S. public square as can be seen for a couple of decades.

Jamie, admittedly I am focusing on fiscal policy and ignoring your point that the Federal Reserve and Central Bank through monetary policies can avert a problem created by our growing federal debt. My fear is the federal debt and failures of a fiscal debt responsibility is reaching a point where even sound monetary policies cannot save the day.

Breaking your comments into two buckets:

1) Japanese demographics and long term economic outlook is much bleaker than the U.S. many would argue. So to me, this says that markets are less concerned with debt burden (rightfully or wrongfully) and more concerned about higher growth which would lead to higher inflation (we can agree the stimulus is amplifying that potential issue).

2) I never advocated for this fiscal stimulus, particularly on the spending side. I think tax cuts may have had a more meaningful effect if they were more limited in scope.

That being said, I'm a pro growth guy. More growth gives you flexibility to address fiscal problems and gives a country a competitive advantage. I look at Japan as an example of a country that I should going to fall out of economic relevance in another generation or two.

 

[DCDAVID]

Only a leftist would call a tax cut “Stimulus”. It’s my friggin money douche.

The “it’s my money crowd”tend to forget that it is also their national debt.
The tax cuts were done in an irresponsible manner and will turn out to be a net negative.
For now...enjoy the sugar high.

 

[meridian]

So what? Again, what’s your point?

Since our reverend will not answer your question, as an ex-devout Christian, I will help him out.
The point is very simple. Let me try with an example. We have an apple.
Obama says it is red. According to our rev., that's evil since "red" signifies Communism.
Trump says it is red. According to our rev., that's great since "red" signifies vibrant.

You are welcome, Rev.

 

[UncleMark]

The “it’s my money crowd”tend to forget that it is also their national debt.

No no no, that's not how it works.

It's their money. The debt belongs to food stamp and Medicare recipients and all the other tit-suckers.

 

[JamieDimonsBalls]

Explaining why the Japanese Government Bond rates are the lowest in the world, and given this, why I am concerned about our increasing government debts causing interest rates to escalate in both our government and private sectors is an interesting study.

Guess the easiest explanation involves the differences between Japan and the U.S, For starters, the Japanese are extremely nationalistic and homogeneous as compared to us. This adds up to Japanese citizens owning almost all of their own public debts even at rates barely above 1%, By contrast 45% of our federal debt is held by foreigners looking for less risk at a fairly high return. In addition the Japanese and their politicians accept GDP growth rates which would be unacceptable in the U.S. public square as can be seen for a couple of decades.

Jamie, admittedly I am focusing on fiscal policy and ignoring your point that the Federal Reserve and Central Bank through monetary policies can avert a problem created by our growing federal debt. My fear is the federal debt and failures of a fiscal debt responsibility is reaching a point where even sound monetary policies cannot save the day.

Hoot, here is an interesting chart that is relevant to what you were trying to convey. One of my favorite fixed income PMs makes weekly or semi-weekly posts about yields.

He states that there is a correlation between declining foreign ownership of USTs and yields. However, also admits that part of the discrepancy can be explained through monetary policy. Japanese funds rate target is still MINUS 0.1% vs. our Fed Funds of 2.0%. In other words, I acknowledge and accept the impact of inflation expectations, growth and deficits have some impact on yields, but the primary discrepancy has been the Fed's normalization relative to other central banks.