I don't understand bonds at all
I don't understand bonds at all
Angel Ross
Other urls found in this thread:
investopedia.com
fred.stlouisfed.org
twitter.com
Elijah Davis
Buying and selling them can get a little confusing.
What don't you understand OP?
Ethan Brown
I think you made a wrong turn somewhere user. We only pretend to know what we're doing here.
Hunter Williams
Honestly, the trolling and shitposting is fun and hilarious, but very few people here actually know wtf they're talking about. Usually a disagreement just turns into an ad hominem fight anyways.
Ethan Robinson
They're the backbone of the entire economy and understanding them will financepill you.
It's debt. The government owes you interest, which from your perspective will be yield. When you buy a bond, the gov has instant liquidity (cash) to spend freely, but they're indebted to you.
When you read that China owns most of our debt, that literally just means they own a lot of our bonds. Japan owns the most though.
Levi Richardson
Fr china owns a lot of our debt? And Japan owns most? Damn I didn't know that. Doesn't the fed buy most of the bonds as of recently? And that's really what is meant by 'money printing'?
I tried to take a deep dive on bonds but had trouble answering my questions. Found some good resources on incestopedia like one good article was talking about yield curves. OP you might find this interesting
investopedia.com
Jose Howard
The FED isn't allowed to buy bonds directly from the Treasury. They do this weird roundabout thing where OTHER central banks (bank of japan, bank of china) buy the bonds from the US treasury. Central banks then sell these bonds to the open market, and THEN the FED is allowed to buy because that's the law.
fred.stlouisfed.org
Austin Sullivan
Check the FEDs balance sheet and you'll see what they're holding. Mostly Treasury Bills and Mortgage Backed Securities.
"Money printing" is QE, it's also the FED monetizing government deficit spending. Inflation comes from government deficit spending and commercial bank loans.
QT is just the FED trying to sell off the Treasuries it holds on its balance sheet (or just let them mature and don't roll them over).
Christopher Wright
^ This. It's retarded. But, for all intensive purposes, the FED is putting securities on its balance sheet and the US Treasury is liable.
Kevin Richardson
QT hasn't existed since the 90s
David Diaz
Damn that is one parabolic looking chart. Scams gotta fall apart at some point
Benjamin Anderson
>for all intensive purposes
Gavin Morris
>Fr china owns a lot of our debt? And Japan owns most?
USD debt is cheap for foreign governments and it used to be pretty risk-free until the US started weaponizing it recently and since USD supply started getting tight after 2008.
if you're china or japan, to hedge your debt and to protect yourself against rate hikes that can make USD debt payments hurt hard, you build foreign currency reserves. in order to make your reserves generate yield, you buy US treasuries.
that said, demand from foreign governments has obviously been in the gutter recently. china decided to lend their USD out to development countries like sri lanka for structural securities. historically low bond yields mean that it's almost better to just hold USD instead. and now that the fed is hiking rates and everyone is getting squeezed on their bond payments, countries liquidate their treasury bonds for USD, stifling demand.
>And that's really what is meant by 'money printing'?
take your time and read archive dot ph/cXow5 very carefully, including the boring accounting examples at the end (they're the most valuable part of the article). make sure you understand every sentence. there are few things more valuable for macro understanding than getting a good grasp on the specifics and considerations related to money printing.
Brayden Reed
They were able to reduce the balance sheet by about 1 Trillion between 2018 and late 2019. But, then they had the repo crisis and then the whole Covid bullshit.
Jackson Carter
Why doesn't the government just spend less money AAAAHHHHHHH WHAT THE FUCK ARE THOSE NIGGERS DOING
Jose Green
it's not just central banks that act as the intermediator for the fed buying treasuries. regular banks do as well. but this is not why boj or boc owns lots of US debt.
Kayden Parker
*intents
Cooper Ortiz
Ty user will study this intently
Liam Harris
Oh also in Lynn Alden a troon? She's got great stuff to say but my tranny radar goes ballistic when I see and hear her
Evan Rodriguez
Gonna read that archive link too. Thanks
Jack Cook
Can confirm, I frequently post on Any Forums and I don't have the slightest clue what I'm talking about
Xavier Morales
what happens if I have a bond with a german business... and the company bankrupts, or the euro collapses? Do I lose my money? I was duped, so I cannot get the money before 2024. I am mad at the person who tricked me, they did not tell me everything.
Jayden Russell
Yeah, businesses and nations can default.
Check out Argentinian bonds. 50% 10 year yield. It's that high because they've defaulted several times in the last couple decades so you will most likely NOT get your money back. The 1-year bonds look nice though.