credit risk is the risk of not being paid back. US Treasury bonds of all sorts will always be paid back because the treasury can simply print the money to pay you back.
You are thinking of interest rate risk, in which your 4% bond becomes worth less because newer bonds are paying, say, 10%.
Or maybe you want to call it 'risk of negative real return after inflation.'
Bernanke changed the Fed accounting to held to maturity. However, the Fed is already holding bonds that show an over $1 Trillion loss. If it was a business it would be filing for bankruptcy protection. It is impossible for this money to ever be paid back thru tax receipts. Call that whatever you like, I call it credit risk, and I am not alone.
the fed will get its money back at maturity just like all long-term US bond holders will.
The trillion dollar loss, if true, is temporary in nominal terms. But real in after-inflation terms.
I'll say it again: the US gummint has a printing press. It can print all the dollars it wants. There is no credit risk but there is interest rate risk.
And national debts don't need to be 'paid back.' They only need to be refinanced/rolled over into eternity.
This post was edited 1 minute after it was posted.
Bernanke changed the Fed accounting to held to maturity. However, the Fed is already holding bonds that show an over $1 Trillion loss. If it was a business it would be filing for bankruptcy protection. It is impossible for this money to ever be paid back thru tax receipts. Call that whatever you like, I call it credit risk, and I am not alone.
the fed will get its money back at maturity just like all long-term US bond holders will.
The trillion dollar loss, if true, is temporary in nominal terms. But real in after-inflation terms.
I'll say it again: the US gummint has a printing press. It can print all the dollars it wants. There is no credit risk but there is interest rate risk.
And national debts don't need to be 'paid back.' They only need to be refinanced/rolled over into eternity.
Currently refinancing isn’t working well.
Meanwhile via Zerohedge: “folks selling NVDA to buy Vinfast: latest meme stonk up another 50% to $120BN”
... the Fed is already holding bonds that show an over $1 Trillion loss. If it was a business it would be filing for bankruptcy protection. It is impossible for this money to ever be paid back thru tax receipts. Call that whatever you like, I call it credit risk, and I am not alone.
It's not a business. Wake up Igy.
While nothing is impossible, the chance of the US gummint failing to pay its treasury bond obligations is, in the minds of any reasonable person I know, vanishingly low, and among the lowest of possible default risks.
the fed will get its money back at maturity just like all long-term US bond holders will.
The trillion dollar loss, if true, is temporary in nominal terms. But real in after-inflation terms.
I'll say it again: the US gummint has a printing press. It can print all the dollars it wants. There is no credit risk but there is interest rate risk.
And national debts don't need to be 'paid back.' They only need to be refinanced/rolled over into eternity.
Currently refinancing isn’t working well.
Meanwhile via Zerohedge: “folks selling NVDA to buy Vinfast: latest meme stonk up another 50% to $120BN”
Igy - where do you see the S & P at 12/31/23?
Also the Dow and Nasdaq year-end?
Will the markets tank in the next 4 months? Do you agree with Jeremy Grantham that the S & P will be around 2000 year-end?
the fed will get its money back at maturity just like all long-term US bond holders will.
The trillion dollar loss, if true, is temporary in nominal terms. But real in after-inflation terms.
I'll say it again: the US gummint has a printing press. It can print all the dollars it wants. There is no credit risk but there is interest rate risk.
And national debts don't need to be 'paid back.' They only need to be refinanced/rolled over into eternity.
Currently refinancing isn’t working well.
Meanwhile via Zerohedge: “folks selling NVDA to buy Vinfast: latest meme stonk up another 50% to $120BN”
Refinancing is pretty normal. Inflation is 3-4% and the US has to pay 4-5% for a loan. That's probably fairly normal, right?
I'll add one thing - hate to get political on this thread but for years the US conservatives have been threatening to shut down the government and purposefully default on the debt. That risk has to be taken into consideration and is probably a major reason for the debt downgrade. So I'll amend to say that there is a default risk on US sov debt, but it is entirely self-inflicted.
The US economy continues to boom. 5.9% real GDP growth right now. Amazing stuff.
Federal Reserve today:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2023 is 5.9 percent on August 24, up from 5.8 percent on August 16.
Meanwhile via Zerohedge: “folks selling NVDA to buy Vinfast: latest meme stonk up another 50% to $120BN”
Refinancing is pretty normal. Inflation is 3-4% and the US has to pay 4-5% for a loan. That's probably fairly normal, right?
I'll add one thing - hate to get political on this thread but for years the US conservatives have been threatening to shut down the government and purposefully default on the debt. That risk has to be taken into consideration and is probably a major reason for the debt downgrade. So I'll amend to say that there is a default risk on US sov debt, but it is entirely self-inflicted.
My view is less partisan than yours, seeing both parties asleep at the wheel with enormous social and economic problems. Masking with money printing is not a solution.
Meanwhile via Zerohedge: “folks selling NVDA to buy Vinfast: latest meme stonk up another 50% to $120BN”
Igy - where do you see the S & P at 12/31/23?
Also the Dow and Nasdaq year-end?
Will the markets tank in the next 4 months? Do you agree with Jeremy Grantham that the S & P will be around 2000 year-end?
“Due to a structural imbalance between revenues and spending, the federal government continues to run large and growing budget deficits. For 2023, the Congressional Budget Office (CBO) estimated in May that the federal budget deficit will total $1.5 trillion — about $160 billion larger than in 2022.”
These are enormous numbers, and give the impression all is good. I have no particular number for year end. I do believe this type of spending leads to many problems. The chaos in cities, reflections of economic inequality, transfer payments that promote moral hazard, and an increasing division within the citizenry. Tough times ahead, especially in the election year of 2024. I would not be surprised if there is another attempt at a Covid shutdown. I am not taking anything for granted Bear or Bull.
This post was edited 2 minutes after it was posted.
Wait, what?! That Sven (Northman Trader) dude was wrong? Imagine that.
Not too familiar with this Sven character but was watching this video from Sept of last year and at 1:10 of the video I saw NVDA trading at 125. It is currently trading at 472.
Sven Henrich, NorthmanTrader founder, joins 'TechCheck' to discuss what he's seeing in the Nasdaq 100, his focus on software and how the 'currency war' plays...
Wait, what?! That Sven (Northman Trader) dude was wrong? Imagine that.
Not too familiar with this Sven character but was watching this video from Sept of last year and at 1:10 of the video I saw NVDA trading at 125. It is currently trading at 472.
I think it is a good time to pay attention to technicals. A break here could easily take us back to the breakout at 4150.
And in the off chance that it were to happen, how many more "breaks" would have to happen before your projection about year end S&P 500 forecast coming true? You know, the one where you said something like 3100.
