Ten Year Real Yield Curve Hits Zero

[alice wellintown]

Yes, exactly, and, as I stated, and as the statement from the Fed I
linked points out, one of the "paradoxes of thrift" that is giving the
Fed fits in the housing, REO and mortgage markets, is the failure of
incentive programs. People, and banks are stuffing the mattresses
rather than take advantages of a a program that would free up money
for spending or investment while improving the household balance
sheets and bank REO and MBS portfolios. On this thread and on others,
I've included the very famous quote, "Uou can lead a horse to
water...so increased savings, while improving short term positions,
will erode those positions, unless,  unless money begins to circulate,
velocity, jobs, capital investment. In other words, we need Wall
Street to create wealth, but wall street is only wanting to get money
for nothing and stick it in UST. Itz the old spread banking; even a
first year finance student knows how to make this kind of wealth.
Hell, I think it's in chapter one of marcia stigum's money market
book.



On Sun, Sep 4, 2011 at 8:47 PM, Charles Albert <cfalbert at gmail.com> wrote:
> Uh...not exactly.....there is something called The Paradox of Thrift.....
>
>
> love,
> cfa
>
> On Sun, Sep 4, 2011 at 3:32 PM, alice wellintown <alicewellintown at gmail.com>
> wrote:
>>
>> Like I said, where is RR when we need some voo-doo-doo economics. Cut
>> taxes and Fund five fucking wars. Run the deficit up to the moon ans
>> watch the markets fly to mars. Unemployment will be wiped out as
>> businesses, now stuffed with cash, invest and hire, people get money
>> and confidence and spend and off we go.
>>
>> Sounds like Vooo-Dooo!
>>
>> The answer is, we need to cut the deficit because when deficits grow
>> too large, say, as a percentage of GDP, even when rates are low, or
>> even when real rates (rate minus inflation) are low or negative, the
>> cost of these deficits drain money away from investment in productive
>> and constructive endeavors.
>
>