It means that the bondholder must pay the issuer to hold the bond. If that fact is new to you, it will play games with all your assumptions about what interest denominated securities will do going forward.

Think about interest “cost” on the federal debt being a source of revenue for the Treasury Department. There is no end to the mischief that some could get into.

Haven’t we danced that dance before?

Plus, any temporary economic “upturn” from quantitative easing has been followed by extended dollar weakness.

The solution to our problem is freeing up WEALTH AND JOB CREATORS, not the artificial creation of money and lasting debt.

Granted weakening the currency has it’s own problems. I don’t think it is any sort of magic bullet, there are many structural reforms that need to take place as well as cutting government spending.

But it has to be admitted that there was a slight upturn in economic activity after each phase of quantitative easing.

Yet the Fed has done some $2 trillion of quantitative easing, but it hasn’t worked–even when combined with the $780 billion stimulus bill. It’s hard to believe that another $400 billion is all it would take to boost us to prosperity.

The usual point of boosting the money supply is to make money cheaper; that is, to lower interest rates and devalue the currency.

But interest rates are already close to zero as it is. Since interest rates cannot go negative (in nominal terms), no matter how much more you boost the money supply, the money won’t get cheaper.

Devaluation of the currency has real risks, especially when the currency is the dollar, the world’s reserve currency.

And of course, Obama won’t mention that.

Mew

As for retirees, all I can say is, good luck. I plan to keep working until I fall out of the saddle.

Mew

Mew