Food prices at record high - to stay high for extended period

[John.St]

Ok, maybe I was to quick to lump you in with the BBW. I apparently mistakenly thought your posting on the subject was going to lead up to some kind of conspiracy theory or attack on the evil empire of the north for deliberately causing the problem.

Yes, you were a little too fast on the trigger.

As a lifelong (half a century) supporter of the US - albeit not all of it's policies, but most of them are to be preferred over China and the Soviet Union (R.I.P.) - I feel sorrow when the US administration, sometimes for ulterior reasons, behave stupidly.

 

[bigbadwolf]

You are wrong that no one wants to hold dollars.
There may be some diversification- but every treasury auction still sells out, at the lowest possible interest rates.

If no one wanted dollars, the Fed would have to RAISE interest rates they pay. But, instead, they are going down. And they are already essentially zero. In fact, people still buy T Bills that pay Zero.

Today's news is that Bill Gross's PIMCO has entirely divested itself of US Treasuries. More here:

Bill Gross has stripped all of its $28 billion US bond holdings out of the $236 billion Pimco Total Return, which is the world’s largest investment fund.

Bill Gross in his latest investment commentary said that QE has affected everything from interest rates to stock prices and risk spreads so that any quantitative tightening by withdrawing ‘ … nearly $1.5 trillion in annualized check writing may have dramatic consequences in the reverse direction‘. For him the crunch question is, who will buy US Treasuries when the Fed stops buying them? ‘By eliminating QE II, the Fed would be ripping a Band Aid off a partially-healed scab,’ he said.​

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[barnaby33]

I had previously assumed that it was generally understood that QE meant the Fed buying the Treasury debt. Maybe that was a point of confusion between Ries and I earlier.

 

[bigbadwolf]

I had previously assumed that it was generally understood that QE meant the Fed buying the Treasury debt. Maybe that was a point of confusion between Ries and I earlier.

As things stand, the US government has painted itself in a corner and will probably have to resuscitate quantitative easing to fund its fiscal deficits -- which will have a negative impact on those holding dollars and dollar instruments. At some stage of the game it will have a direct inflationary effect (other than just helping to create speculative bubbles, that is).

 

[gouchobob]

As things stand, the US government has painted itself in a corner and will probably have to resuscitate quantitative easing to fund its fiscal deficits -- which will have a negative impact on those holding dollars and dollar instruments. At some stage of the game it will have a direct inflationary effect (other than just helping to create speculative bubbles, that is).

I think with the problems that are going to become apparent soon the dollar will become the currency of choice, not because its in great shape but because it will look better in comparison. Those investing in dollar based assets today will do quite well over the never few years.

http://seekingalpha.com/article/257541-the-great-china-bubble-and-why-it-will-collapse?source=dashboard_global-investing