Discussion:
_Buck Out_ by Ken Benton
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Lynn McGuire
2017-05-01 20:51:07 UTC
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_Buck Out_ by Ken Benton
https://www.amazon.com/gp/product/1514666979

A singular book, no prequel or sequel, about a financial apocalypse in
the USA. I read the POD (print on demand) version in trade paperback
with very nice paper and fonts. If there is a sequel published, I will
purchase it for reading. In fact, if the author publishes anything
else, I will purchase it.

Of all the apocalyptic scenarios facing the USA, I believe a financial
apocalypse to be of the highest danger, going from a remote concern now
in 2017 to an almost certainty in ten to twenty years. The current debt
of the USA, 20 trillion dollars, is just about equivalent to the USA
GDP. I believe that as the debt of the USA approaches twice the GDP,
the financial stability of the USA will significantly weaken and be
subject to attacks.

The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
effective reserve currency of the world, also drops significantly in
value compared to other currencies. The stock markets in the USA drop
by 85%. The rest of the story is about our protagonists getting out of
New York City and to their retreat in West Virginia.

My rating: 4.4 out of 5 stars
Amazon rating: 4.4 out of 5 stars (98 reviews)

Lynn
David Johnston
2017-05-01 21:59:52 UTC
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Post by Lynn McGuire
_Buck Out_ by Ken Benton
https://www.amazon.com/gp/product/1514666979
A singular book, no prequel or sequel, about a financial apocalypse in
the USA. I read the POD (print on demand) version in trade paperback
with very nice paper and fonts. If there is a sequel published, I will
purchase it for reading. In fact, if the author publishes anything
else, I will purchase it.
Of all the apocalyptic scenarios facing the USA, I believe a financial
apocalypse to be of the highest danger, going from a remote concern now
in 2017 to an almost certainty in ten to twenty years. The current debt
of the USA, 20 trillion dollars, is just about equivalent to the USA
GDP. I believe that as the debt of the USA approaches twice the GDP,
the financial stability of the USA will significantly weaken and be
subject to attacks.
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
effective reserve currency of the world, also drops significantly in
value compared to other currencies. The stock markets in the USA drop
by 85%. The rest of the story is about our protagonists getting out of
New York City and to their retreat in West Virginia.
My rating: 4.4 out of 5 stars
Amazon rating: 4.4 out of 5 stars (98 reviews)
Lynn
Why don't they just drive out?
Lynn McGuire
2017-05-01 22:51:42 UTC
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Post by David Johnston
Post by Lynn McGuire
_Buck Out_ by Ken Benton
https://www.amazon.com/gp/product/1514666979
A singular book, no prequel or sequel, about a financial apocalypse in
the USA. I read the POD (print on demand) version in trade paperback
with very nice paper and fonts. If there is a sequel published, I will
purchase it for reading. In fact, if the author publishes anything
else, I will purchase it.
Of all the apocalyptic scenarios facing the USA, I believe a financial
apocalypse to be of the highest danger, going from a remote concern now
in 2017 to an almost certainty in ten to twenty years. The current debt
of the USA, 20 trillion dollars, is just about equivalent to the USA
GDP. I believe that as the debt of the USA approaches twice the GDP,
the financial stability of the USA will significantly weaken and be
subject to attacks.
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
effective reserve currency of the world, also drops significantly in
value compared to other currencies. The stock markets in the USA drop
by 85%. The rest of the story is about our protagonists getting out of
New York City and to their retreat in West Virginia.
My rating: 4.4 out of 5 stars
Amazon rating: 4.4 out of 5 stars (98 reviews)
Lynn
Why don't they just drive out?
From New York City to West Virginia ? If yes, they waited too long.
The financial collapse of the dollar caused major problems in the
various supply systems such as food and gasoline.

Actually, only a third of the book is about the journey from NYC to WV.
The final third of the book is about what happens when they get to their
destination. Squatters and other such nuisances.

Lynn
Kevrob
2017-05-02 01:46:58 UTC
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Post by Lynn McGuire
Post by David Johnston
Post by Lynn McGuire
_Buck Out_ by Ken Benton
https://www.amazon.com/gp/product/1514666979
A singular book, no prequel or sequel, about a financial apocalypse in
the USA. I read the POD (print on demand) version in trade paperback
with very nice paper and fonts. If there is a sequel published, I will
purchase it for reading. In fact, if the author publishes anything
else, I will purchase it.
Of all the apocalyptic scenarios facing the USA, I believe a financial
apocalypse to be of the highest danger, going from a remote concern now
in 2017 to an almost certainty in ten to twenty years. The current debt
of the USA, 20 trillion dollars, is just about equivalent to the USA
GDP. I believe that as the debt of the USA approaches twice the GDP,
the financial stability of the USA will significantly weaken and be
subject to attacks.
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
effective reserve currency of the world, also drops significantly in
value compared to other currencies. The stock markets in the USA drop
by 85%. The rest of the story is about our protagonists getting out of
New York City and to their retreat in West Virginia.
My rating: 4.4 out of 5 stars
Amazon rating: 4.4 out of 5 stars (98 reviews)
Lynn
Why don't they just drive out?
From New York City to West Virginia ? If yes, they waited too long.
The financial collapse of the dollar caused major problems in the
various supply systems such as food and gasoline.
Actually, only a third of the book is about the journey from NYC to WV.
The final third of the book is about what happens when they get to their
destination.
Squatters and other such nuisances.
You have just effectively described the Feds.

https://en.wikipedia.org/wiki/The_Greenbrier

:)


Kevin R
Greg Goss
2017-05-02 02:25:19 UTC
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Post by David Johnston
Post by Lynn McGuire
by 85%. The rest of the story is about our protagonists getting out of
New York City and to their retreat in West Virginia.
Why don't they just drive out?
https://en.wikipedia.org/wiki/Hurricane_Rita#Mass_evacuation
--
We are geeks. Resistance is voltage over current.
Greg Goss
2017-05-02 02:23:35 UTC
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Post by Lynn McGuire
Of all the apocalyptic scenarios facing the USA, I believe a financial
apocalypse to be of the highest danger, going from a remote concern now
in 2017 to an almost certainty in ten to twenty years. The current debt
of the USA, 20 trillion dollars, is just about equivalent to the USA
GDP. I believe that as the debt of the USA approaches twice the GDP,
the financial stability of the USA will significantly weaken and be
subject to attacks.
Clancy's novel about a US/Japan war starts with the Japanese crashing
Wall Street.
--
We are geeks. Resistance is voltage over current.
Lynn McGuire
2017-05-02 02:54:18 UTC
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Raw Message
Post by Greg Goss
Post by Lynn McGuire
Of all the apocalyptic scenarios facing the USA, I believe a financial
apocalypse to be of the highest danger, going from a remote concern now
in 2017 to an almost certainty in ten to twenty years. The current debt
of the USA, 20 trillion dollars, is just about equivalent to the USA
GDP. I believe that as the debt of the USA approaches twice the GDP,
the financial stability of the USA will significantly weaken and be
subject to attacks.
Clancy's novel about a US/Japan war starts with the Japanese crashing
Wall Street.
I don't remember that one but I do not doubt it. Name ?

Thanks,
Lynn
Greg Goss
2017-05-02 14:12:38 UTC
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Raw Message
Post by Lynn McGuire
Post by Greg Goss
Post by Lynn McGuire
Of all the apocalyptic scenarios facing the USA, I believe a financial
apocalypse to be of the highest danger, going from a remote concern now
in 2017 to an almost certainty in ten to twenty years. The current debt
of the USA, 20 trillion dollars, is just about equivalent to the USA
GDP. I believe that as the debt of the USA approaches twice the GDP,
the financial stability of the USA will significantly weaken and be
subject to attacks.
Clancy's novel about a US/Japan war starts with the Japanese crashing
Wall Street.
I don't remember that one but I do not doubt it. Name ?
https://en.wikipedia.org/wiki/Debt_of_Honor
--
We are geeks. Resistance is voltage over current.
Dimensional Traveler
2017-05-02 03:47:10 UTC
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Raw Message
Post by Greg Goss
Post by Lynn McGuire
Of all the apocalyptic scenarios facing the USA, I believe a financial
apocalypse to be of the highest danger, going from a remote concern now
in 2017 to an almost certainty in ten to twenty years. The current debt
of the USA, 20 trillion dollars, is just about equivalent to the USA
GDP. I believe that as the debt of the USA approaches twice the GDP,
the financial stability of the USA will significantly weaken and be
subject to attacks.
Clancy's novel about a US/Japan war starts with the Japanese crashing
Wall Street.
I'm reminded of some TV show/movie I was once. Some Soviet high-ranking
intelligence officer has been carefully hoarding very large amounts of
money for decades and was going to use it to crash the American economy
by manipulating the stock market. The Heroes fail to stop him and he
launches his multi-billion dollar economic attack. Wall Street
basically hiccups and continues happily along with its trillions of
dollars of trades that day. :) (And that doesn't even take into
account that the New York Stock Exchange isn't the only major exchange
in just the US. Realistically, if you want to crash the US economy you
have to crash the entire world's economy. Basically a multi-national
suicide attack.)
--
Some days you just don't have enough middle fingers!
-dsr-
2017-05-02 11:57:38 UTC
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Post by Lynn McGuire
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
That's not how bonds work.

A bond is a promise to pay back a certain amount of money with a certain
amount of interest at a defined time in the future. Hence "six month" T-bills
and "ten year" T-bills.

If China wants to sell all their bonds, they need a counterparty to
buy them. You can't force redemption early. (With some bonds, the bond
issuer can offer early redemption at the full price, or at a tiny discount,
but not all.)

So if China and Japan both sell all their T-bills, somebody needs to be
interested in buying them, and the price will be denominated in... I don't
know, what is China going to want that other people will give them?

Anyway, interest rates for bonds are set at the time of sale, they don't
change.

-dsr-
Scott Lurndal
2017-05-02 13:54:46 UTC
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Post by -dsr-
Post by Lynn McGuire
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
That's not how bonds work.
A bond is a promise to pay back a certain amount of money with a certain
amount of interest at a defined time in the future. Hence "six month" T-bills
and "ten year" T-bills.
If China wants to sell all their bonds, they need a counterparty to
buy them. You can't force redemption early. (With some bonds, the bond
issuer can offer early redemption at the full price, or at a tiny discount,
but not all.)
So if China and Japan both sell all their T-bills, somebody needs to be
interested in buying them, and the price will be denominated in... I don't
know, what is China going to want that other people will give them?
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
While all the above is true (i.e. the coupon rate is fixed), the effective
interest rate is dependent upon the purchase price of the bond on the
secondary market. So a bond with a nominal face value of $100/unit and
a coupon rate of 4% may have an effective interest rate much less if
purchased for $105/unit on the secondary market (which is where most
bonds are purchased) depending on maturity date and how long it is held.
-dsr-
2017-05-03 00:36:40 UTC
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Raw Message
Post by Scott Lurndal
Post by -dsr-
Post by Lynn McGuire
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
That's not how bonds work.
A bond is a promise to pay back a certain amount of money with a certain
amount of interest at a defined time in the future. Hence "six month" T-bills
and "ten year" T-bills.
If China wants to sell all their bonds, they need a counterparty to
buy them. You can't force redemption early. (With some bonds, the bond
issuer can offer early redemption at the full price, or at a tiny discount,
but not all.)
So if China and Japan both sell all their T-bills, somebody needs to be
interested in buying them, and the price will be denominated in... I don't
know, what is China going to want that other people will give them?
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
While all the above is true (i.e. the coupon rate is fixed), the effective
interest rate is dependent upon the purchase price of the bond on the
secondary market. So a bond with a nominal face value of $100/unit and
a coupon rate of 4% may have an effective interest rate much less if
purchased for $105/unit on the secondary market (which is where most
bonds are purchased) depending on maturity date and how long it is held.
What can't happen, however, is "the US gets in trouble because Japan and China
selling US bonds causes the interest rate on those bonds to increase and the price
of bonds to decrease."

The US is solely on the hook to repay the bonds that they already sold, for
the face price, in US dollars, which they can print.

What would happen if 25% of the outstanding bonds were to be offered
tomorrow at a 20% discount? They would nearly all be purchased by people
who believed that the US would redeem those bonds. A large proportion
could plausibly be purchased by the US government itself, effectively
reducing debt by the difference between face value and sale price.

-dsr-
Greg Goss
2017-05-03 14:11:41 UTC
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Raw Message
Post by -dsr-
What can't happen, however, is "the US gets in trouble because Japan and China
selling US bonds causes the interest rate on those bonds to increase and the price
of bonds to decrease."
The US is solely on the hook to repay the bonds that they already sold, for
the face price, in US dollars, which they can print.
What would happen if 25% of the outstanding bonds were to be offered
tomorrow at a 20% discount? They would nearly all be purchased by people
who believed that the US would redeem those bonds. A large proportion
could plausibly be purchased by the US government itself, effectively
reducing debt by the difference between face value and sale price.
The US needs to keep selling additional bonds. The price they get for
those new bonds depends on the price of the existing bonds. If the
existing bonds are worth 10% of face value, where does the US get the
money to buy them back?
--
We are geeks. Resistance is voltage over current.
-dsr-
2017-05-04 10:43:15 UTC
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Raw Message
Post by Greg Goss
Post by -dsr-
What can't happen, however, is "the US gets in trouble because Japan and China
selling US bonds causes the interest rate on those bonds to increase and the price
of bonds to decrease."
The US is solely on the hook to repay the bonds that they already sold, for
the face price, in US dollars, which they can print.
What would happen if 25% of the outstanding bonds were to be offered
tomorrow at a 20% discount? They would nearly all be purchased by people
who believed that the US would redeem those bonds. A large proportion
could plausibly be purchased by the US government itself, effectively
reducing debt by the difference between face value and sale price.
The US needs to keep selling additional bonds. The price they get for
those new bonds depends on the price of the existing bonds. If the
existing bonds are worth 10% of face value, where does the US get the
money to buy them back?
You've made a mistake there.

The credit-worthiness of new US bonds depends on the perception of the
likelihood of redemption. The US has an obligation to redeem them at
the end of their term, for their face value.

If the price of an existing bond goes substantially below face value,
the US may offer that price to the current owner and thereby buy back
the bond at a discount. The bond is no longer outstanding, and so the US
has gained by whatever the difference is between the price paid and
the face value of the bond (plus a little more for the expected time value
of the money).

If, as you say, the existing bonds are being offered for sale at 10%
of face value, the US gets to cancel 90% of the debt represented by
the bonds. (This is not a situation that is ever going to happen.)

Now, where does the US get money? The US prints money. That's 100%
of the source of US money.

You might ask: why does anyone place any value in US money? The short
answer is "history of usefulness" and the long answer is David Graeber's
book _Debt: The First Five Thousand Years_.
William Hyde
2017-05-04 20:39:39 UTC
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Raw Message
Post by Greg Goss
Post by -dsr-
What can't happen, however, is "the US gets in trouble because Japan and China
selling US bonds causes the interest rate on those bonds to increase and the price
of bonds to decrease."
The US is solely on the hook to repay the bonds that they already sold, for
the face price, in US dollars, which they can print.
What would happen if 25% of the outstanding bonds were to be offered
tomorrow at a 20% discount? They would nearly all be purchased by people
who believed that the US would redeem those bonds. A large proportion
could plausibly be purchased by the US government itself, effectively
reducing debt by the difference between face value and sale price.
The US needs to keep selling additional bonds. The price they get for
those new bonds depends on the price of the existing bonds.
Oh, there are ways of getting around that. The new bonds could be secured in ways that make them even less prone to default. In difficult times Canada issued bonds that paid 8.5%, with the rider that if and only if they were held to maturity a bonus would be paid.

If the
Post by Greg Goss
existing bonds are worth 10% of face value, where does the US get the
money to buy them back?
In part, from me. The biggest investing mistake I ever made was being poor in the early 1980s when US 30 year treasuries were being sold at 17%. But some people, lucky bastards, were not poor, and thus beat the stock market for thirty years.

I'd try not to make that mistake again.

I don't generally approve of asset sales by governments, but if you can get a 23% coupon on the money, it would probably make sense. Plus of course you don't have to pay it off at the end. I don't know if the author's quoted interest is yield-to-maturity or not. Perhaps Lynn could tell us.


William Hyde
Lynn McGuire
2017-05-04 21:20:53 UTC
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Raw Message
Post by William Hyde
Post by Greg Goss
Post by -dsr-
What can't happen, however, is "the US gets in trouble because Japan and China
selling US bonds causes the interest rate on those bonds to increase and the price
of bonds to decrease."
The US is solely on the hook to repay the bonds that they already sold, for
the face price, in US dollars, which they can print.
What would happen if 25% of the outstanding bonds were to be offered
tomorrow at a 20% discount? They would nearly all be purchased by people
who believed that the US would redeem those bonds. A large proportion
could plausibly be purchased by the US government itself, effectively
reducing debt by the difference between face value and sale price.
The US needs to keep selling additional bonds. The price they get for
those new bonds depends on the price of the existing bonds.
Oh, there are ways of getting around that. The new bonds could be secured in ways that make them even less prone to default. In difficult times Canada issued bonds that paid 8.5%, with the rider that if and only if they were held to maturity a bonus would be paid.
If the
Post by Greg Goss
existing bonds are worth 10% of face value, where does the US get the
money to buy them back?
In part, from me. The biggest investing mistake I ever made was being poor in the early 1980s when US 30 year treasuries were being sold at 17%. But some people, lucky bastards, were not poor, and thus beat the stock market for thirty years.
I'd try not to make that mistake again.
I don't generally approve of asset sales by governments, but if you can get a 23% coupon on the money, it would probably make sense. Plus of course you don't have to pay it off at the end. I don't know if the author's quoted interest is yield-to-maturity or not. Perhaps Lynn could tell us.
William Hyde
* * * S P O I L E R * * *







The author had the tbill market totally freeze up. Basically, the bond
(and other) markets are built on trust. The author thinks that trust
will fail after a certain point, I believe that he is correct.

There are some $70 trillion dollars of investment money in the world.
The owners of that money are direly concerned with very low risk. Most
of them will forgo high rewards to achieve low risk.

The author's solution was to move the money in the USA back to a gold
backed standard after debasing the money by 2/3rds. But he did not go
into why this would work. That is why I gave the book 4 stars instead
of 5 stars. I just don't know what to do in this situation. The
problem is not the money, the problem is the money junkie, the USA
government.

Lynn
Cryptoengineer
2017-05-05 03:27:09 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by William Hyde
Post by Greg Goss
Post by -dsr-
What can't happen, however, is "the US gets in trouble because
Japan and China selling US bonds causes the interest rate on those
bonds to increase and the price of bonds to decrease."
The US is solely on the hook to repay the bonds that they already
sold, for the face price, in US dollars, which they can print.
What would happen if 25% of the outstanding bonds were to be
offered tomorrow at a 20% discount? They would nearly all be
purchased by people who believed that the US would redeem those
bonds. A large proportion could plausibly be purchased by the US
government itself, effectively reducing debt by the difference
between face value and sale price.
The US needs to keep selling additional bonds. The price they get
for those new bonds depends on the price of the existing bonds.
Oh, there are ways of getting around that. The new bonds could be
secured in ways that make them even less prone to default. In
difficult times Canada issued bonds that paid 8.5%, with the rider
that if and only if they were held to maturity a bonus would be paid.
If the
Post by Greg Goss
existing bonds are worth 10% of face value, where does the US get
the money to buy them back?
In part, from me. The biggest investing mistake I ever made was
being poor in the early 1980s when US 30 year treasuries were being
sold at 17%. But some people, lucky bastards, were not poor, and thus
beat the stock market for thirty years.
I'd try not to make that mistake again.
I don't generally approve of asset sales by governments, but if you
can get a 23% coupon on the money, it would probably make sense.
Plus of course you don't have to pay it off at the end. I don't know
if the author's quoted interest is yield-to-maturity or not. Perhaps
Lynn could tell us.
William Hyde
* * * S P O I L E R * * *
The author had the tbill market totally freeze up. Basically, the
bond (and other) markets are built on trust. The author thinks that
trust will fail after a certain point, I believe that he is correct.
Short term markets react very quickly to changes in price. I have no
doubt that if large amounts of Treasury debt was offered at a deep
discount, there'd be a flash crash in the market.

But within hours, humans would look at the situation, determine that
China was dumping, and that there was no special reason to expect
the US to default. They'd load up on the bargain China was offering,
and the prices would bounce back.
Post by Lynn McGuire
There are some $70 trillion dollars of investment money in the world.
The owners of that money are direly concerned with very low risk.
Most of them will forgo high rewards to achieve low risk.
The author's solution was to move the money in the USA back to a gold
backed standard after debasing the money by 2/3rds. But he did not go
into why this would work. That is why I gave the book 4 stars instead
of 5 stars. I just don't know what to do in this situation. The
problem is not the money, the problem is the money junkie, the USA
government.
Presumably the author's a gold bug. He didn't do his math; all the gold
mined in the history of the world to date is worth 'only' about $7T.

pt
William Hyde
2017-05-05 03:58:32 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by William Hyde
Post by Greg Goss
Post by -dsr-
What can't happen, however, is "the US gets in trouble because Japan and China
selling US bonds causes the interest rate on those bonds to increase and the price
of bonds to decrease."
The US is solely on the hook to repay the bonds that they already sold, for
the face price, in US dollars, which they can print.
What would happen if 25% of the outstanding bonds were to be offered
tomorrow at a 20% discount? They would nearly all be purchased by people
who believed that the US would redeem those bonds. A large proportion
could plausibly be purchased by the US government itself, effectively
reducing debt by the difference between face value and sale price.
The US needs to keep selling additional bonds. The price they get for
those new bonds depends on the price of the existing bonds.
Oh, there are ways of getting around that. The new bonds could be secured in ways that make them even less prone to default. In difficult times Canada issued bonds that paid 8.5%, with the rider that if and only if they were held to maturity a bonus would be paid.
If the
Post by Greg Goss
existing bonds are worth 10% of face value, where does the US get the
money to buy them back?
In part, from me. The biggest investing mistake I ever made was being poor in the early 1980s when US 30 year treasuries were being sold at 17%. But some people, lucky bastards, were not poor, and thus beat the stock market for thirty years.
I'd try not to make that mistake again.
I don't generally approve of asset sales by governments, but if you can get a 23% coupon on the money, it would probably make sense. Plus of course you don't have to pay it off at the end. I don't know if the author's quoted interest is yield-to-maturity or not. Perhaps Lynn could tell us.
William Hyde
* * * S P O I L E R * * *
The author had the tbill market totally freeze up. Basically, the bond
(and other) markets are built on trust. The author thinks that trust
will fail after a certain point, I believe that he is correct.
He's wrong. Trust only fails when they stop payments of interest or principal on bonds that come due. Not when other creditors lock in their losses by dumping bonds.
Post by Lynn McGuire
There are some $70 trillion dollars of investment money in the world.
The owners of that money are direly concerned with very low risk.
While the truly rich are deeply concerned with capital preservation, they also know that sub-inflationary returns, after taxes, are a good way to go from rich to comfortably off.

The most reliable way to improve and maintain a fortune is by holding a spectrum of assets, from very low risk to moderate-high risk. All well chosen, of course.

Most
Post by Lynn McGuire
of them will forgo high rewards to achieve low risk.
The people who buy Treasuries now fit that profile, some of them, but as prices drop a different kind of investor gets interested. I have very rarely been interested in bonds as bonds. But three times I have bought bonds rated "junkier than junk" and trading well below par because my assessment of the company was that the reward was more than the risk.

At the moment, you'd have to pay me quite a bit to buy the notes of any country, and IMHO US treasuries are quite overpriced. In the scenario given, my interest would grow as the price fell and eventually I'd buy.

A wise old broker once said to me "Sure, that bank *could* fail, but in that case we'd all be living off potatoes we grow in the back yard and money would be worthless anyway".

If you get a chance to buy treasuries paying 23% take it. If the US government won't pay, not only is your money worthless but anything else you have will be confiscated by the successor government/governments.

Maybe you could get your gold surgically implanted.
Post by Lynn McGuire
The author's solution was to move the money in the USA back to a gold
backed standard after debasing the money by 2/3rds. But he did not go
into why this would work.
I don't think you have remotely enough gold for that. Debasing by 95%, maybe.


William Hyde
Lynn McGuire
2017-05-03 17:27:16 UTC
Permalink
Raw Message
Post by -dsr-
Post by Scott Lurndal
Post by -dsr-
Post by Lynn McGuire
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
That's not how bonds work.
A bond is a promise to pay back a certain amount of money with a certain
amount of interest at a defined time in the future. Hence "six month" T-bills
and "ten year" T-bills.
If China wants to sell all their bonds, they need a counterparty to
buy them. You can't force redemption early. (With some bonds, the bond
issuer can offer early redemption at the full price, or at a tiny discount,
but not all.)
So if China and Japan both sell all their T-bills, somebody needs to be
interested in buying them, and the price will be denominated in... I don't
know, what is China going to want that other people will give them?
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
While all the above is true (i.e. the coupon rate is fixed), the effective
interest rate is dependent upon the purchase price of the bond on the
secondary market. So a bond with a nominal face value of $100/unit and
a coupon rate of 4% may have an effective interest rate much less if
purchased for $105/unit on the secondary market (which is where most
bonds are purchased) depending on maturity date and how long it is held.
What can't happen, however, is "the US gets in trouble because Japan and China
selling US bonds causes the interest rate on those bonds to increase and the price
of bonds to decrease."
The US is solely on the hook to repay the bonds that they already sold, for
the face price, in US dollars, which they can print.
What would happen if 25% of the outstanding bonds were to be offered
tomorrow at a 20% discount? They would nearly all be purchased by people
who believed that the US would redeem those bonds. A large proportion
could plausibly be purchased by the US government itself, effectively
reducing debt by the difference between face value and sale price.
-dsr-
What happens if people refuse to take USA Dollars to buy anything ?
Would you exchange the Statue of Liberty for stuff ?

Lynn
James Nicoll
2017-05-03 17:34:50 UTC
Permalink
Raw Message
Post by -dsr-
Post by -dsr-
Post by Scott Lurndal
Post by -dsr-
Post by Lynn McGuire
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
That's not how bonds work.
A bond is a promise to pay back a certain amount of money with a certain
amount of interest at a defined time in the future. Hence "six
month" T-bills
Post by -dsr-
Post by Scott Lurndal
Post by -dsr-
and "ten year" T-bills.
If China wants to sell all their bonds, they need a counterparty to
buy them. You can't force redemption early. (With some bonds, the bond
issuer can offer early redemption at the full price, or at a tiny discount,
but not all.)
So if China and Japan both sell all their T-bills, somebody needs to be
interested in buying them, and the price will be denominated in... I don't
know, what is China going to want that other people will give them?
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
While all the above is true (i.e. the coupon rate is fixed), the effective
interest rate is dependent upon the purchase price of the bond on the
secondary market. So a bond with a nominal face value of $100/unit and
a coupon rate of 4% may have an effective interest rate much less if
purchased for $105/unit on the secondary market (which is where most
bonds are purchased) depending on maturity date and how long it is held.
What can't happen, however, is "the US gets in trouble because Japan and China
selling US bonds causes the interest rate on those bonds to increase
and the price
Post by -dsr-
of bonds to decrease."
The US is solely on the hook to repay the bonds that they already sold, for
the face price, in US dollars, which they can print.
What would happen if 25% of the outstanding bonds were to be offered
tomorrow at a 20% discount? They would nearly all be purchased by people
who believed that the US would redeem those bonds. A large proportion
could plausibly be purchased by the US government itself, effectively
reducing debt by the difference between face value and sale price.
-dsr-
What happens if people refuse to take USA Dollars to buy anything ?
Would you exchange the Statue of Liberty for stuff ?
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
--
My reviews can be found at http://jamesdavisnicoll.com/
My Livejournal at http://www.livejournal.com/users/james_nicoll
My patreon is at https://www.patreon.com/jamesdnicoll
Peter Trei
2017-05-03 18:03:05 UTC
Permalink
Raw Message
Post by James Nicoll
Post by -dsr-
Post by -dsr-
Post by Scott Lurndal
Post by -dsr-
Post by Lynn McGuire
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
That's not how bonds work.
A bond is a promise to pay back a certain amount of money with a certain
amount of interest at a defined time in the future. Hence "six
month" T-bills
Post by -dsr-
Post by Scott Lurndal
Post by -dsr-
and "ten year" T-bills.
If China wants to sell all their bonds, they need a counterparty to
buy them. You can't force redemption early. (With some bonds, the bond
issuer can offer early redemption at the full price, or at a tiny discount,
but not all.)
So if China and Japan both sell all their T-bills, somebody needs to be
interested in buying them, and the price will be denominated in... I don't
know, what is China going to want that other people will give them?
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
While all the above is true (i.e. the coupon rate is fixed), the effective
interest rate is dependent upon the purchase price of the bond on the
secondary market. So a bond with a nominal face value of $100/unit and
a coupon rate of 4% may have an effective interest rate much less if
purchased for $105/unit on the secondary market (which is where most
bonds are purchased) depending on maturity date and how long it is held.
What can't happen, however, is "the US gets in trouble because Japan and China
selling US bonds causes the interest rate on those bonds to increase
and the price
Post by -dsr-
of bonds to decrease."
The US is solely on the hook to repay the bonds that they already sold, for
the face price, in US dollars, which they can print.
What would happen if 25% of the outstanding bonds were to be offered
tomorrow at a 20% discount? They would nearly all be purchased by people
who believed that the US would redeem those bonds. A large proportion
could plausibly be purchased by the US government itself, effectively
reducing debt by the difference between face value and sale price.
-dsr-
What happens if people refuse to take USA Dollars to buy anything ?
Would you exchange the Statue of Liberty for stuff ?
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
A lot of stuff in the short term which we could make locally at a higher
cost - clothes, for example.

In the longer term we have the knowledge and skill to build pretty much
anything we need. What would be limiting are raw materials we can't find
in the US. I'm trying to come up with some, but there aren't many. Rare
earth elements, perhaps.

pt
Gutless Umbrella Carrying Sissy
2017-05-03 18:49:46 UTC
Permalink
Raw Message
On Wednesday, May 3, 2017 at 1:34:53 PM UTC-4, James Nicoll
Post by James Nicoll
Post by -dsr-
Post by -dsr-
Post by Scott Lurndal
Post by -dsr-
Post by Lynn McGuire
The scenario in the book is that China and Japan own 25%
of the USA treasury bills. In a unspecified future date,
China decides to sell all of their USA bonds and notifies
Japan that they are going to do so. The Japanese follow
the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the
bond markets are flooded and the bond prices drop
precipitously. The Dollar, the
That's not how bonds work.
A bond is a promise to pay back a certain amount of money
with a certain amount of interest at a defined time in the
future. Hence "six
month" T-bills
Post by -dsr-
Post by Scott Lurndal
Post by -dsr-
and "ten year" T-bills.
If China wants to sell all their bonds, they need a
counterparty to buy them. You can't force redemption
early. (With some bonds, the bond issuer can offer early
redemption at the full price, or at a tiny discount,
but not all.)
So if China and Japan both sell all their T-bills,
somebody needs to be interested in buying them, and the
price will be denominated in... I don't know, what is
China going to want that other people will give them?
Anyway, interest rates for bonds are set at the time of
sale, they don't change.
While all the above is true (i.e. the coupon rate is
fixed), the effective interest rate is dependent upon the
purchase price of the bond on the secondary market. So a
bond with a nominal face value of $100/unit and a coupon
rate of 4% may have an effective interest rate much less if
purchased for $105/unit on the secondary market (which is
where most bonds are purchased) depending on maturity date
and how long it is held.
What can't happen, however, is "the US gets in trouble
because Japan and China selling US bonds causes the interest
rate on those bonds to increase
and the price
Post by -dsr-
of bonds to decrease."
The US is solely on the hook to repay the bonds that they
already sold, for the face price, in US dollars, which they
can print.
What would happen if 25% of the outstanding bonds were to be
offered tomorrow at a 20% discount? They would nearly all be
purchased by people who believed that the US would redeem
those bonds. A large proportion could plausibly be purchased
by the US government itself, effectively reducing debt by
the difference between face value and sale price.
-dsr-
What happens if people refuse to take USA Dollars to buy
anything ? Would you exchange the Statue of Liberty for stuff
?
Thought experiment: say aliens clamp a force field around the
US impervious to all trade goods. What does the US run out of?
A lot of stuff in the short term which we could make locally at
a higher cost - clothes, for example.
In the longer term we have the knowledge and skill to build
pretty much anything we need. What would be limiting are raw
materials we can't find in the US. I'm trying to come up with
some, but there aren't many. Rare earth elements, perhaps.
Actually, the US has some extensive deposits. They've just never
been developed into working mines. Yet. (One major despit is being
developed now, IIRC, as a result of China playing games with
supplies a few years back.)
--
Terry Austin

Vacation photos from Iceland:
https://plus.google.com/u/0/collection/QaXQkB

"Terry Austin: like the polio vaccine, only with more asshole."
-- David Bilek

Jesus forgives sinners, not criminals.
Jay E. Morris
2017-05-04 02:05:51 UTC
Permalink
Raw Message
Post by Gutless Umbrella Carrying Sissy
Actually, the US has some extensive deposits. They've just never
been developed into working mines. Yet. (One major despit is being
developed now, IIRC, as a result of China playing games with
supplies a few years back.)
The ones in California closed because of low prices but there is one
being developed at Round Top Mountain in Texas. They think the
extraction and transportation costs will be lower there.
Gutless Umbrella Carrying Sissy
2017-05-04 02:15:41 UTC
Permalink
Raw Message
Post by Jay E. Morris
Post by Gutless Umbrella Carrying Sissy
Actually, the US has some extensive deposits. They've just
never been developed into working mines. Yet. (One major despit
is being developed now, IIRC, as a result of China playing
games with supplies a few years back.)
The ones in California closed because of low prices but there is
Anything that might possibly make life for the unwashed masses better
will certainly be driven out of California. Wouldn't want the
servants to get uppity.
Post by Jay E. Morris
one being developed at Round Top Mountain in Texas. They think
the extraction and transportation costs will be lower there.
They're likely right. Texas is, at the moment, at the far opposite
end of the "friendly to business" spectrum from California.
--
Terry Austin

Vacation photos from Iceland:
https://plus.google.com/u/0/collection/QaXQkB

"Terry Austin: like the polio vaccine, only with more asshole."
-- David Bilek

Jesus forgives sinners, not criminals.
Lynn McGuire
2017-05-04 17:53:37 UTC
Permalink
Raw Message
Post by Gutless Umbrella Carrying Sissy
Post by Jay E. Morris
Post by Gutless Umbrella Carrying Sissy
Actually, the US has some extensive deposits. They've just
never been developed into working mines. Yet. (One major despit
is being developed now, IIRC, as a result of China playing
games with supplies a few years back.)
The ones in California closed because of low prices but there is
Anything that might possibly make life for the unwashed masses better
will certainly be driven out of California. Wouldn't want the
servants to get uppity.
Post by Jay E. Morris
one being developed at Round Top Mountain in Texas. They think
the extraction and transportation costs will be lower there.
They're likely right. Texas is, at the moment, at the far opposite
end of the "friendly to business" spectrum from California.
At the moment. We need to stop the Californians from moving here to The
Great State of Texas as they are corrupting us. The Texas population is
growing at almost a million people per year right now with all of the
refugees.

Lynn
Gutless Umbrella Carrying Sissy
2017-05-04 18:57:05 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by Gutless Umbrella Carrying Sissy
Post by Jay E. Morris
Post by Gutless Umbrella Carrying Sissy
Actually, the US has some extensive deposits. They've just
never been developed into working mines. Yet. (One major
despit is being developed now, IIRC, as a result of China
playing games with supplies a few years back.)
The ones in California closed because of low prices but there is
Anything that might possibly make life for the unwashed masses
better will certainly be driven out of California. Wouldn't
want the servants to get uppity.
Post by Jay E. Morris
one being developed at Round Top Mountain in Texas. They think
the extraction and transportation costs will be lower there.
They're likely right. Texas is, at the moment, at the far
opposite end of the "friendly to business" spectrum from
California.
At the moment. We need to stop the Californians from moving
here to The Great State of Texas as they are corrupting us. The
Texas population is growing at almost a million people per year
right now with all of the refugees.
Welcome to Hell. It's full of Californicators. Now bend over.
--
Terry Austin

Vacation photos from Iceland:
https://plus.google.com/u/0/collection/QaXQkB

"Terry Austin: like the polio vaccine, only with more asshole."
-- David Bilek

Jesus forgives sinners, not criminals.
-dsr-
2017-05-04 19:51:51 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by Gutless Umbrella Carrying Sissy
Post by Jay E. Morris
Post by Gutless Umbrella Carrying Sissy
Actually, the US has some extensive deposits. They've just
never been developed into working mines. Yet. (One major despit
is being developed now, IIRC, as a result of China playing
games with supplies a few years back.)
The ones in California closed because of low prices but there is
Anything that might possibly make life for the unwashed masses better
will certainly be driven out of California. Wouldn't want the
servants to get uppity.
Post by Jay E. Morris
one being developed at Round Top Mountain in Texas. They think
the extraction and transportation costs will be lower there.
They're likely right. Texas is, at the moment, at the far opposite
end of the "friendly to business" spectrum from California.
At the moment. We need to stop the Californians from moving here to The
Great State of Texas as they are corrupting us. The Texas population is
growing at almost a million people per year right now with all of the
refugees.
The Houston Chronicle says you are off by a factor of 10 for Texas-California,
and a factor of 2 overall.

http://www.chron.com/business/texanomics/article/Texas-again-tops-the-nation-in-population-growth-10809552.php

-dsr-
Lynn McGuire
2017-05-04 20:45:12 UTC
Permalink
Raw Message
Post by -dsr-
Post by Lynn McGuire
Post by Gutless Umbrella Carrying Sissy
Post by Jay E. Morris
Post by Gutless Umbrella Carrying Sissy
Actually, the US has some extensive deposits. They've just
never been developed into working mines. Yet. (One major despit
is being developed now, IIRC, as a result of China playing
games with supplies a few years back.)
The ones in California closed because of low prices but there is
Anything that might possibly make life for the unwashed masses better
will certainly be driven out of California. Wouldn't want the
servants to get uppity.
Post by Jay E. Morris
one being developed at Round Top Mountain in Texas. They think
the extraction and transportation costs will be lower there.
They're likely right. Texas is, at the moment, at the far opposite
end of the "friendly to business" spectrum from California.
At the moment. We need to stop the Californians from moving here to The
Great State of Texas as they are corrupting us. The Texas population is
growing at almost a million people per year right now with all of the
refugees.
The Houston Chronicle says you are off by a factor of 10 for Texas-California,
and a factor of 2 overall.
http://www.chron.com/business/texanomics/article/Texas-again-tops-the-nation-in-population-growth-10809552.php
-dsr-
Dude, did I say all of the refugees immigrating to Texas were from
California ? And the Chronicle is only counting legal refugees.

Lynn
Gutless Umbrella Carrying Sissy
2017-05-04 21:27:16 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by -dsr-
Post by Lynn McGuire
Post by Gutless Umbrella Carrying Sissy
Post by Jay E. Morris
Post by Gutless Umbrella Carrying Sissy
Actually, the US has some extensive deposits. They've just
never been developed into working mines. Yet. (One major
despit is being developed now, IIRC, as a result of China
playing games with supplies a few years back.)
The ones in California closed because of low prices but
there is
Anything that might possibly make life for the unwashed
masses better will certainly be driven out of California.
Wouldn't want the servants to get uppity.
Post by Jay E. Morris
one being developed at Round Top Mountain in Texas. They
think the extraction and transportation costs will be lower
there.
They're likely right. Texas is, at the moment, at the far
opposite end of the "friendly to business" spectrum from
California.
At the moment. We need to stop the Californians from moving
here to The Great State of Texas as they are corrupting us.
The Texas population is growing at almost a million people per
year right now with all of the refugees.
The Houston Chronicle says you are off by a factor of 10 for
Texas-California, and a factor of 2 overall.
http://www.chron.com/business/texanomics/article/Texas-again-top
s-the-nation-in-population-growth-10809552.php
-dsr-
Dude, did I say all of the refugees immigrating to Texas were
from California ? And the Chronicle is only counting legal
refugees.
Illegal immigration has dropped pretty dramatically in the last few
months, and was dropping at a more modest pace before that.

You shot from the hip, and missed. Get over it.
--
Terry Austin

Vacation photos from Iceland:
https://plus.google.com/u/0/collection/QaXQkB

"Terry Austin: like the polio vaccine, only with more asshole."
-- David Bilek

Jesus forgives sinners, not criminals.
Jaimie Vandenbergh
2017-05-04 20:46:40 UTC
Permalink
Raw Message
Post by -dsr-
Post by Lynn McGuire
At the moment. We need to stop the Californians from moving here to The
Great State of Texas as they are corrupting us. The Texas population is
growing at almost a million people per year right now with all of the
refugees.
The Houston Chronicle says you are off by a factor of 10 for Texas-California,
and a factor of 2 overall.
http://www.chron.com/business/texanomics/article/Texas-again-tops-the-nation-in-population-growth-10809552.php
Having known three Californian families who moved to Texas, all three
moved for better quality schooling for the kids. So there's that,
anecdote though it is.

Cheers - Jaimie
--
"Every Little Thing She Does Is Sufficiently Advanced Technology"
Lynn McGuire
2017-05-04 21:22:41 UTC
Permalink
Raw Message
Post by Jaimie Vandenbergh
Post by -dsr-
Post by Lynn McGuire
At the moment. We need to stop the Californians from moving here to The
Great State of Texas as they are corrupting us. The Texas population is
growing at almost a million people per year right now with all of the
refugees.
The Houston Chronicle says you are off by a factor of 10 for Texas-California,
and a factor of 2 overall.
http://www.chron.com/business/texanomics/article/Texas-again-tops-the-nation-in-population-growth-10809552.php
Having known three Californian families who moved to Texas, all three
moved for better quality schooling for the kids. So there's that,
anecdote though it is.
Cheers - Jaimie
I sold my house in 2013 for cash to a couple from California. They got
the money from mainland China, they showed me the wire transfer as proof
of funds.

Lynn
Scott Lurndal
2017-05-03 19:52:01 UTC
Permalink
Raw Message
Post by Peter Trei
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
A lot of stuff in the short term which we could make locally at a higher
cost - clothes, for example.
In the longer term we have the knowledge and skill to build pretty much
anything we need. What would be limiting are raw materials we can't find
in the US. I'm trying to come up with some, but there aren't many. Rare
earth elements, perhaps.
There are rare earth elements in the western US. Not currently
cost-effective to extract, but that would change.

The USA may actually become more sustainable, if it were the case
that such a force field existed.
J. Clarke
2017-05-04 07:34:00 UTC
Permalink
Raw Message
Post by Peter Trei
Post by James Nicoll
Post by -dsr-
Post by -dsr-
Post by Scott Lurndal
Post by -dsr-
Post by Lynn McGuire
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
That's not how bonds work.
A bond is a promise to pay back a certain amount of money with a certain
amount of interest at a defined time in the future. Hence "six
month" T-bills
Post by -dsr-
Post by Scott Lurndal
Post by -dsr-
and "ten year" T-bills.
If China wants to sell all their bonds, they need a counterparty to
buy them. You can't force redemption early. (With some bonds, the bond
issuer can offer early redemption at the full price, or at a tiny discount,
but not all.)
So if China and Japan both sell all their T-bills, somebody needs to be
interested in buying them, and the price will be denominated in... I don't
know, what is China going to want that other people will give them?
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
While all the above is true (i.e. the coupon rate is fixed), the effective
interest rate is dependent upon the purchase price of the bond on the
secondary market. So a bond with a nominal face value of $100/unit and
a coupon rate of 4% may have an effective interest rate much less if
purchased for $105/unit on the secondary market (which is where most
bonds are purchased) depending on maturity date and how long it is held.
What can't happen, however, is "the US gets in trouble because Japan and China
selling US bonds causes the interest rate on those bonds to increase
and the price
Post by -dsr-
of bonds to decrease."
The US is solely on the hook to repay the bonds that they already sold, for
the face price, in US dollars, which they can print.
What would happen if 25% of the outstanding bonds were to be offered
tomorrow at a 20% discount? They would nearly all be purchased by people
who believed that the US would redeem those bonds. A large proportion
could plausibly be purchased by the US government itself, effectively
reducing debt by the difference between face value and sale price.
-dsr-
What happens if people refuse to take USA Dollars to buy anything ?
Would you exchange the Statue of Liberty for stuff ?
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
A lot of stuff in the short term which we could make locally at a higher
cost - clothes, for example.
In the longer term we have the knowledge and skill to build pretty much
anything we need. What would be limiting are raw materials we can't find
in the US. I'm trying to come up with some, but there aren't many. Rare
earth elements, perhaps.
That's a common misconception. "Rare earths" aren't particularly rare,
just difficult to extract from most ores. The US was the leading producer
at one time IIRC but stopped doing so when the Chinese undercut the market.
Anthony Nance
2017-05-03 18:56:22 UTC
Permalink
Raw Message
Post by James Nicoll
Post by -dsr-
Post by -dsr-
Post by Scott Lurndal
Post by -dsr-
Post by Lynn McGuire
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
That's not how bonds work.
A bond is a promise to pay back a certain amount of money with a certain
amount of interest at a defined time in the future. Hence "six
month" T-bills
Post by -dsr-
Post by Scott Lurndal
Post by -dsr-
and "ten year" T-bills.
If China wants to sell all their bonds, they need a counterparty to
buy them. You can't force redemption early. (With some bonds, the bond
issuer can offer early redemption at the full price, or at a tiny discount,
but not all.)
So if China and Japan both sell all their T-bills, somebody needs to be
interested in buying them, and the price will be denominated in... I don't
know, what is China going to want that other people will give them?
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
While all the above is true (i.e. the coupon rate is fixed), the effective
interest rate is dependent upon the purchase price of the bond on the
secondary market. So a bond with a nominal face value of $100/unit and
a coupon rate of 4% may have an effective interest rate much less if
purchased for $105/unit on the secondary market (which is where most
bonds are purchased) depending on maturity date and how long it is held.
What can't happen, however, is "the US gets in trouble because Japan and China
selling US bonds causes the interest rate on those bonds to increase
and the price
Post by -dsr-
of bonds to decrease."
The US is solely on the hook to repay the bonds that they already sold, for
the face price, in US dollars, which they can print.
What would happen if 25% of the outstanding bonds were to be offered
tomorrow at a 20% discount? They would nearly all be purchased by people
who believed that the US would redeem those bonds. A large proportion
could plausibly be purchased by the US government itself, effectively
reducing debt by the difference between face value and sale price.
-dsr-
What happens if people refuse to take USA Dollars to buy anything ?
Would you exchange the Statue of Liberty for stuff ?
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Some kinds of produce[1] - some permanently, some seasonally.
- Tony
[1] In the sense of "Produce is a generalized term
of farm-produced crops and goods, including fruits
and vegetables - meats, grains, oats, etc. are also
sometimes considered produce." (via Wikipedia)
l***@dimnakorr.com
2017-05-03 19:10:34 UTC
Permalink
Raw Message
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Coffee. So, you know, mass hysteria and panic in the streets.


--
Leif Roar Moldskred
James Nicoll
2017-05-03 19:42:36 UTC
Permalink
Raw Message
Post by l***@dimnakorr.com
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Coffee. So, you know, mass hysteria and panic in the streets.
http://youtu.be/Bbv5B71KmkA
Chocolate, too, i imagine.
--
My reviews can be found at http://jamesdavisnicoll.com/
My Livejournal at http://www.livejournal.com/users/james_nicoll
My patreon is at https://www.patreon.com/jamesdnicoll
Peter Trei
2017-05-03 21:21:19 UTC
Permalink
Raw Message
Post by James Nicoll
Post by l***@dimnakorr.com
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Coffee. So, you know, mass hysteria and panic in the streets.
http://youtu.be/Bbv5B71KmkA
Chocolate, too, i imagine.
Like for coffee, Hawaii comes to the rescue.

https://www.lovebigisland.com/organic-chocolate-big-island-hawaii/

pt
Lawrence Watt-Evans
2017-05-06 21:10:55 UTC
Permalink
Raw Message
On Wed, 3 May 2017 14:21:19 -0700 (PDT), Peter Trei
Post by Peter Trei
Post by James Nicoll
Post by l***@dimnakorr.com
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Coffee. So, you know, mass hysteria and panic in the streets.
http://youtu.be/Bbv5B71KmkA
Chocolate, too, i imagine.
Like for coffee, Hawaii comes to the rescue.
https://www.lovebigisland.com/organic-chocolate-big-island-hawaii/
I am greatly relieved.
--
My webpage is at http://www.watt-evans.com
Peter Trei
2017-05-03 21:18:47 UTC
Permalink
Raw Message
Post by l***@dimnakorr.com
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Coffee. So, you know, mass hysteria and panic in the streets.
May I introduce you to Kona Coffee?
https://en.wikipedia.org/wiki/Kona_coffee

pt
Lynn McGuire
2017-05-03 21:28:32 UTC
Permalink
Raw Message
Post by Peter Trei
Post by l***@dimnakorr.com
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Coffee. So, you know, mass hysteria and panic in the streets.
May I introduce you to Kona Coffee?
https://en.wikipedia.org/wiki/Kona_coffee
pt
I've been drinking that at church lately on Sundays. Not bad, kinda mellow.

Lynn
J. Clarke
2017-05-04 07:39:10 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by Peter Trei
Post by l***@dimnakorr.com
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Coffee. So, you know, mass hysteria and panic in the streets.
May I introduce you to Kona Coffee?
https://en.wikipedia.org/wiki/Kona_coffee
pt
I've been drinking that at church lately on Sundays. Not bad, kinda mellow.
That's a pretty high-end church. Real Kona (rather than the common "Kona
blend" which has one Kona bean in the factory somewhere) is _not_ cheap.

However the crop is small and the ability to increase acreage is limited,
and that assumes that the aliens put Hawaii inside the force field. It's
not really going to be a mass-market alternative.
James Nicoll
2017-05-04 13:51:20 UTC
Permalink
Raw Message
Post by James Nicoll
Post by Lynn McGuire
Post by Peter Trei
Post by l***@dimnakorr.com
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US
impervious
Post by Lynn McGuire
Post by Peter Trei
Post by l***@dimnakorr.com
Post by James Nicoll
to all trade goods. What does the US run out of?
Coffee. So, you know, mass hysteria and panic in the streets.
May I introduce you to Kona Coffee?
https://en.wikipedia.org/wiki/Kona_coffee
pt
I've been drinking that at church lately on Sundays. Not bad, kinda mellow.
That's a pretty high-end church. Real Kona (rather than the common "Kona
blend" which has one Kona bean in the factory somewhere) is _not_ cheap.
I think up the rule is you can still call it Kona if at least 25% it is
actually Kona. I got the exgf a sack of the real stuff as part of our
ongoing food thing.
Post by James Nicoll
However the crop is small and the ability to increase acreage is limited,
and that assumes that the aliens put Hawaii inside the force field. It's
not really going to be a mass-market alternative.
If the aliens take a 'only the 48 contigious states are included stance',
I wonder where that leaves Hawaii and Alaska? Between them they have
what, two million people? About the same as Slovenia? And a gross product
of about 90 billion dollars, or a bit more than Slovakia. And probably
a really impressive military for a country with the throw weight of a
city, for as long as they can fund it.

(Annexing Alaska to Canada would make the map tidier, at the cost of
sticking us with a bunch of Alaskans)
--
My reviews can be found at http://jamesdavisnicoll.com/
My Livejournal at http://www.livejournal.com/users/james_nicoll
My patreon is at https://www.patreon.com/jamesdnicoll
Lynn McGuire
2017-05-04 17:55:28 UTC
Permalink
Raw Message
Post by J. Clarke
Post by Lynn McGuire
Post by Peter Trei
Post by l***@dimnakorr.com
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Coffee. So, you know, mass hysteria and panic in the streets.
May I introduce you to Kona Coffee?
https://en.wikipedia.org/wiki/Kona_coffee
pt
I've been drinking that at church lately on Sundays. Not bad, kinda mellow.
That's a pretty high-end church. Real Kona (rather than the common "Kona
blend" which has one Kona bean in the factory somewhere) is _not_ cheap.
However the crop is small and the ability to increase acreage is limited,
and that assumes that the aliens put Hawaii inside the force field. It's
not really going to be a mass-market alternative.
We have about twelve very large pots of coffee every Sunday morning of
different varieties. My wife likes the Texas pecan coffee and the
cinnamon coffee.

Lynn
Lawrence Watt-Evans
2017-05-06 21:07:58 UTC
Permalink
Raw Message
Post by l***@dimnakorr.com
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Coffee. So, you know, mass hysteria and panic in the streets.
http://youtu.be/Bbv5B71KmkA
And chocolate. I wouldn't care about coffee, but losing chocolate
would be a horror beyond imagining.
--
My webpage is at http://www.watt-evans.com
Scott Lurndal
2017-05-08 13:46:26 UTC
Permalink
Raw Message
Post by Lawrence Watt-Evans
Post by l***@dimnakorr.com
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Coffee. So, you know, mass hysteria and panic in the streets.
http://youtu.be/Bbv5B71KmkA
And chocolate. I wouldn't care about coffee, but losing chocolate
would be a horror beyond imagining.
I wouldn't care about coffee or chocolate, but lack of the winter
fresh fruits from south america would leave a hole (year-around
fresh grapes, fresh blueberrys, cherries, etc. up and down the
west coast of the americas).
Lynn McGuire
2017-05-08 20:09:21 UTC
Permalink
Raw Message
Post by Scott Lurndal
Post by Lawrence Watt-Evans
Post by l***@dimnakorr.com
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Coffee. So, you know, mass hysteria and panic in the streets.
http://youtu.be/Bbv5B71KmkA
And chocolate. I wouldn't care about coffee, but losing chocolate
would be a horror beyond imagining.
I wouldn't care about coffee or chocolate, but lack of the winter
fresh fruits from south america would leave a hole (year-around
fresh grapes, fresh blueberrys, cherries, etc. up and down the
west coast of the americas).
And the Gulf Coast also. It is wild having fresh blueberries and grapes
in January and February.

Lynn
David Goldfarb
2017-05-09 04:05:58 UTC
Permalink
Raw Message
Post by Scott Lurndal
I wouldn't care about coffee or chocolate, but lack of the winter
fresh fruits from south america would leave a hole (year-around
fresh grapes, fresh blueberrys, cherries, etc. up and down the
west coast of the americas).
I'm gonna nitpick at you: grapes and blueberries yes, but cherries
remain a seasonal fruit -- you get them for a few months in the
summer, and a couple more months in the winter.

Not quarreling with your larger point. I'm old enough to remember
when grapes were a summer fruit.
--
David Goldfarb | "Questions are a burden to others.
***@gmail.com | Answers are a prison for oneself."
***@ocf.berkeley.edu | -- _The Prisoner_, "Dance of the Dead"
Scott Lurndal
2017-05-09 13:41:26 UTC
Permalink
Raw Message
Post by David Goldfarb
Post by Scott Lurndal
I wouldn't care about coffee or chocolate, but lack of the winter
fresh fruits from south america would leave a hole (year-around
fresh grapes, fresh blueberrys, cherries, etc. up and down the
west coast of the americas).
I'm gonna nitpick at you: grapes and blueberries yes, but cherries
remain a seasonal fruit -- you get them for a few months in the
summer, and a couple more months in the winter.
You've a point. Around here (west coast), I get cherries from
mid-may through mid-august as the harvest moves up the
coast from BC to BC, then for a month or so around christmas
when costco has the south american bings.

There is always Trader Joes dried montmorencies and canned morello
cherries ($2.99/jar) for the rest of the year :-)
Post by David Goldfarb
Not quarreling with your larger point. I'm old enough to remember
when grapes were a summer fruit.
I remember when winter fruit was peaches, plums, and cherries
canned in the summer along with strawberry jam all put up in the
fruit cellar.
Dimensional Traveler
2017-05-03 19:11:56 UTC
Permalink
Raw Message
Post by James Nicoll
Post by -dsr-
Post by -dsr-
Post by Scott Lurndal
Post by -dsr-
Post by Lynn McGuire
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
That's not how bonds work.
A bond is a promise to pay back a certain amount of money with a certain
amount of interest at a defined time in the future. Hence "six
month" T-bills
Post by -dsr-
Post by Scott Lurndal
Post by -dsr-
and "ten year" T-bills.
If China wants to sell all their bonds, they need a counterparty to
buy them. You can't force redemption early. (With some bonds, the bond
issuer can offer early redemption at the full price, or at a tiny discount,
but not all.)
So if China and Japan both sell all their T-bills, somebody needs to be
interested in buying them, and the price will be denominated in... I don't
know, what is China going to want that other people will give them?
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
While all the above is true (i.e. the coupon rate is fixed), the effective
interest rate is dependent upon the purchase price of the bond on the
secondary market. So a bond with a nominal face value of $100/unit and
a coupon rate of 4% may have an effective interest rate much less if
purchased for $105/unit on the secondary market (which is where most
bonds are purchased) depending on maturity date and how long it is held.
What can't happen, however, is "the US gets in trouble because Japan and China
selling US bonds causes the interest rate on those bonds to increase
and the price
Post by -dsr-
of bonds to decrease."
The US is solely on the hook to repay the bonds that they already sold, for
the face price, in US dollars, which they can print.
What would happen if 25% of the outstanding bonds were to be offered
tomorrow at a 20% discount? They would nearly all be purchased by people
who believed that the US would redeem those bonds. A large proportion
could plausibly be purchased by the US government itself, effectively
reducing debt by the difference between face value and sale price.
-dsr-
What happens if people refuse to take USA Dollars to buy anything ?
Would you exchange the Statue of Liberty for stuff ?
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
A few rare metals for which less efficient work-arounds can probably be
found.

Trump's emigration issues become moot.

Nothing else immediately springs to mind.
--
Some days you just don't have enough middle fingers!
Greg Goss
2017-05-04 05:30:02 UTC
Permalink
Raw Message
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Oxygen? Isn't most of the world's oxygen generated by oceanic micro
plants, with much of the rest coming from the Amazon?
--
We are geeks. Resistance is voltage over current.
David DeLaney
2017-05-05 13:06:37 UTC
Permalink
Raw Message
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Some rare earths. Aussie beer. A good bit of the Internet. Physics results
from CERN. Saltwater fish (unless the force field includes the however-many-
miles-offshore boundary for international waters). Tim Horton's and tequila?

Dave, Gulf Stream influence?
--
\/David DeLaney posting thru EarthLink - "It's not the pot that grows the flower
It's not the clock that slows the hour The definition's plain for anyone to see
Love is all it takes to make a family" - R&P. VISUALIZE HAPPYNET VRbeable<BLINK>
gatekeeper.vic.com/~dbd - net.legends FAQ & Magic / I WUV you in all CAPS! --K.
Don Kuenz
2017-05-05 14:55:17 UTC
Permalink
Raw Message
Post by David DeLaney
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Some rare earths. Aussie beer. A good bit of the Internet. Physics results
from CERN. Saltwater fish (unless the force field includes the however-many-
miles-offshore boundary for international waters). Tim Horton's and tequila?
Dave, Gulf Stream influence?
The force field presumably includes both Alaska and Hawaii. In that
case, a globe, a cloth tape measure, and some back-of-the-envelope
calculation reveals that you can throw in roughly 8.8 million square
miles of Northeast Pacific Ocean saltiness as a sweetener for the deal.

Thank you,

--
Don Kuenz KB7RPU
-dsr-
2017-05-05 16:25:07 UTC
Permalink
Raw Message
Post by David DeLaney
Post by James Nicoll
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
Some rare earths. Aussie beer. A good bit of the Internet. Physics results
from CERN. Saltwater fish (unless the force field includes the however-many-
miles-offshore boundary for international waters). Tim Horton's and tequila?
Dave, Gulf Stream influence?
There are Timmies in various parts of the northeastern US. 5 in Maine, 1 in
Vermont, dozens in NY and Pennsylvania and Ohio, some in West Virginia,
Virginia, and quite a few in Michigan and Minnesota.

Like Champagne, Tequila must be made in a specific place. Thus, there
are agave spirits made in the tequila method just as there are wines
made in the champagne method.

Railean, in Texas, makes a silver agave spirit and a reposado. They also
make rum, but rum distilleries are a dime-a-dozen, for very large and
unrealistic values of a dime.

-dsr-
Kevrob
2017-05-11 20:56:17 UTC
Permalink
Raw Message
Post by James Nicoll
Post by -dsr-
Post by -dsr-
Post by Scott Lurndal
Post by -dsr-
Post by Lynn McGuire
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
That's not how bonds work.
A bond is a promise to pay back a certain amount of money with a certain
amount of interest at a defined time in the future. Hence "six
month" T-bills
Post by -dsr-
Post by Scott Lurndal
Post by -dsr-
and "ten year" T-bills.
If China wants to sell all their bonds, they need a counterparty to
buy them. You can't force redemption early. (With some bonds, the bond
issuer can offer early redemption at the full price, or at a tiny discount,
but not all.)
So if China and Japan both sell all their T-bills, somebody needs to be
interested in buying them, and the price will be denominated in... I don't
know, what is China going to want that other people will give them?
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
While all the above is true (i.e. the coupon rate is fixed), the effective
interest rate is dependent upon the purchase price of the bond on the
secondary market. So a bond with a nominal face value of $100/unit and
a coupon rate of 4% may have an effective interest rate much less if
purchased for $105/unit on the secondary market (which is where most
bonds are purchased) depending on maturity date and how long it is held.
What can't happen, however, is "the US gets in trouble because Japan and China
selling US bonds causes the interest rate on those bonds to increase
and the price
Post by -dsr-
of bonds to decrease."
The US is solely on the hook to repay the bonds that they already sold, for
the face price, in US dollars, which they can print.
What would happen if 25% of the outstanding bonds were to be offered
tomorrow at a 20% discount? They would nearly all be purchased by people
who believed that the US would redeem those bonds. A large proportion
could plausibly be purchased by the US government itself, effectively
reducing debt by the difference between face value and sale price.
-dsr-
What happens if people refuse to take USA Dollars to buy anything ?
Would you exchange the Statue of Liberty for stuff ?
Thought experiment: say aliens clamp a force field around the US impervious
to all trade goods. What does the US run out of?
First? Coffee?

That'd cause a revolution, for sure!

Kevin R

(Would be deprived of tea. I might endure it, but I wouldn't like it.)
Scott Lurndal
2017-05-03 19:49:59 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by -dsr-
What would happen if 25% of the outstanding bonds were to be offered
tomorrow at a 20% discount? They would nearly all be purchased by people
who believed that the US would redeem those bonds. A large proportion
could plausibly be purchased by the US government itself, effectively
reducing debt by the difference between face value and sale price.
-dsr-
What happens if people refuse to take USA Dollars to buy anything ?
Might as well ask what happens if the entire pacific ocean evaporates,
it's probably more likely.
Greg Goss
2017-05-02 14:11:05 UTC
Permalink
Raw Message
Post by -dsr-
Post by Lynn McGuire
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
That's not how bonds work.
A bond is a promise to pay back a certain amount of money with a certain
amount of interest at a defined time in the future. Hence "six month" T-bills
and "ten year" T-bills.
If China wants to sell all their bonds, they need a counterparty to
buy them. You can't force redemption early. (With some bonds, the bond
issuer can offer early redemption at the full price, or at a tiny discount,
but not all.)
The US runs a deficit. If the value of the bonds it wants to sell
today is zilch because there are tons of other now-worthless bonds
competing, it can't finance the new deficit.
--
We are geeks. Resistance is voltage over current.
Lynn McGuire
2017-05-02 19:03:55 UTC
Permalink
Raw Message
Post by Greg Goss
Post by -dsr-
Post by Lynn McGuire
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
That's not how bonds work.
A bond is a promise to pay back a certain amount of money with a certain
amount of interest at a defined time in the future. Hence "six month" T-bills
and "ten year" T-bills.
If China wants to sell all their bonds, they need a counterparty to
buy them. You can't force redemption early. (With some bonds, the bond
issuer can offer early redemption at the full price, or at a tiny discount,
but not all.)
The US runs a deficit. If the value of the bonds it wants to sell
today is zilch because there are tons of other now-worthless bonds
competing, it can't finance the new deficit.
Man, do you have that correct. The USA has been running a one trillion
dollar per year deficit for several years now. The long term forecast
deficit on the USA is rising over one trillion dollars per year.

https://www.statista.com/statistics/216998/forecast-of-the-federal-debt-of-the-united-states/

This is not sustainable.

Lynn
Scott Lurndal
2017-05-02 19:21:48 UTC
Permalink
Raw Message
Post by Lynn McGuire
https://www.statista.com/statistics/216998/forecast-of-the-federal-debt-of-the-united-states/
This is not sustainable.
And you can thank the republican party for bringing the country
to this point. Reagans tax cuts (with no cuts to spending), Shrub's
tax cuts (with massive increase in spending) have pretty much
ensured that the deficit (which had gone to zero in the Clinton
administration) would balloon.

The _ONLY_ way to restore fiscal responsibity is to pay for
what we've purchased by returning to reasonable tax rates.

The idea that cutting taxes on corporate _profits_ will
trickle down (or generate additional taxes from increased
economic activity) has been shown by experience to be
wishful thinking.
Lynn McGuire
2017-05-02 18:58:30 UTC
Permalink
Raw Message
Post by -dsr-
Post by Lynn McGuire
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
That's not how bonds work.
A bond is a promise to pay back a certain amount of money with a certain
amount of interest at a defined time in the future. Hence "six month" T-bills
and "ten year" T-bills.
If China wants to sell all their bonds, they need a counterparty to
buy them. You can't force redemption early. (With some bonds, the bond
issuer can offer early redemption at the full price, or at a tiny discount,
but not all.)
So if China and Japan both sell all their T-bills, somebody needs to be
interested in buying them, and the price will be denominated in... I don't
know, what is China going to want that other people will give them?
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount. There are no interest payments, the payment is the face value
of the bond when it is turned in at the maturation time. If a one year
bond face value is $1,000,000 and it is sold for $900,000 at the bond
auction, the initial interest rate is 11.1%. But, the buyer can turn
around and sell that bond to someone else for a mutually agreeable
price, thus changing the effective interest rate to the buyer. But, the
bond face value never changes.

The USA is continuously redeeming bonds and issuing new bonds. The
average turnover in the entire debt of the USA is less than a couple of
years at the moment. Long bonds are rarely sold compared to three month
and one year bonds. Anyway, if the bond market crashes then that means
that the bond prices crash, thus changing the effective interest rates.
New bonds being sold are reflective of the existing bond market, thus if
the bond market is flooded with five trillion dollars of existing bonds
over six weeks, the entire market prices will crash to reflect all of
the available stock being sold.

There are enough bonds out there that the USA cannot buy all of the
existing bonds back if the market got flooded with them. After all, who
would accept dollars at that point since the bond is a reflection of the
value of the USA dollar ?

Lynn
Scott Lurndal
2017-05-02 19:17:26 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount.
I get regular quarterly dividends for all my treasury bonds (mostly 10yr).
Post by Lynn McGuire
There are no interest payments, the payment is the face value
of the bond when it is turned in at the maturation time. If a one year
bond face value is $1,000,000 and it is sold for $900,000 at the bond
auction, the initial interest rate is 11.1%.
You've clearly no understanding of the bond market - government or
commercial. There is no way that such a one year bond would be sold for
$900,000 original issue. For example, today's rate on a 91-day bill
is 0.82%. The discount on a million dollar 91-day bill would amount
to $2000.
Post by Lynn McGuire
The USA is continuously redeeming bonds and issuing new bonds. The
average turnover in the entire debt of the USA is less than a couple of
years at the moment. Long bonds are rarely sold compared to three month
and one year bonds.
The treasury stopped selling 30-year bonds several years ago. They
still offer 10-year and TIPS.
Post by Lynn McGuire
Anyway, if the bond market crashes then that means
that the bond prices crash, thus changing the effective interest rates.
No, it means that _if the bond is sold_ the effective discount rate
will change. If the bond is held to maturity, the entire value of the
bond will be returned to the bondholder, and the bondholder will get
the coupons at the issue rate until maturity.
Post by Lynn McGuire
There are enough bonds out there that the USA cannot buy all of the
existing bonds back if the market got flooded with them.
Why would the US ever _want_ to buy them back? They'll
be redeemed as they mature. And the expensive bonds, 30-year
with coupons at 9+%, are all maturing (and being replaced with
much less expensive (to the american public) shorter-term debt instruments).
Lynn McGuire
2017-05-02 20:24:38 UTC
Permalink
Raw Message
Post by Scott Lurndal
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount.
I get regular quarterly dividends for all my treasury bonds (mostly 10yr).
Post by Lynn McGuire
There are no interest payments, the payment is the face value
of the bond when it is turned in at the maturation time. If a one year
bond face value is $1,000,000 and it is sold for $900,000 at the bond
auction, the initial interest rate is 11.1%.
You've clearly no understanding of the bond market - government or
commercial. There is no way that such a one year bond would be sold for
$900,000 original issue. For example, today's rate on a 91-day bill
is 0.82%. The discount on a million dollar 91-day bill would amount
to $2000.
Post by Lynn McGuire
The USA is continuously redeeming bonds and issuing new bonds. The
average turnover in the entire debt of the USA is less than a couple of
years at the moment. Long bonds are rarely sold compared to three month
and one year bonds.
The treasury stopped selling 30-year bonds several years ago. They
still offer 10-year and TIPS.
Post by Lynn McGuire
Anyway, if the bond market crashes then that means
that the bond prices crash, thus changing the effective interest rates.
No, it means that _if the bond is sold_ the effective discount rate
will change. If the bond is held to maturity, the entire value of the
bond will be returned to the bondholder, and the bondholder will get
the coupons at the issue rate until maturity.
Post by Lynn McGuire
There are enough bonds out there that the USA cannot buy all of the
existing bonds back if the market got flooded with them.
Why would the US ever _want_ to buy them back? They'll
be redeemed as they mature. And the expensive bonds, 30-year
with coupons at 9+%, are all maturing (and being replaced with
much less expensive (to the american public) shorter-term debt instruments).
I discussed zero coupon bonds. Most of the tbills sold are zero coupon
bonds. Your 10 year bonds are coupon bonds.

https://www.fidelity.com/fixed-income-bonds/individual-bonds/us-treasury-bonds

Yes, the dollar amounts that I used for bond prices are not current
today. Did I say that they were ? They are just samples. And those
dollar amounts have been used several times in my lifetime, especially
in the late 1970s, early 1980s, and the middle 1990s.

And yes, the best way to keep the original interest rate on a bond is to
hold it until maturity. But, sometimes someone wants to sell their bond
early. The book, _Buck Out_ is about countries with significant
holdings of tbills selling their tbills early to cause a financial
failure of the USA. It is just a conjecture of the author that I happen
to agree with.

BTW, when the bond market is flooded with tbills, the Federal Reserve
buys new and old tbills. This is called Quantitative Easing and is
scarier than all get out. We, the USA, have been doing QE for years,
especially since 2009. This is why the Federal Reserve owns over two
trillion dollars of tbills.
https://en.wikipedia.org/wiki/Quantitative_easing
and
https://fred.stlouisfed.org/series/TREAST

Lynn
Scott Lurndal
2017-05-03 12:58:00 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by Scott Lurndal
Post by Lynn McGuire
There are no interest payments, the payment is the face value
of the bond when it is turned in at the maturation time. If a one year
bond face value is $1,000,000 and it is sold for $900,000 at the bond
auction, the initial interest rate is 11.1%.
You've clearly no understanding of the bond market - government or
commercial. There is no way that such a one year bond would be sold for
$900,000 original issue. For example, today's rate on a 91-day bill
is 0.82%. The discount on a million dollar 91-day bill would amount
to $2000.
Why would the US ever _want_ to buy them back? They'll
be redeemed as they mature. And the expensive bonds, 30-year
with coupons at 9+%, are all maturing (and being replaced with
much less expensive (to the american public) shorter-term debt instruments).
I discussed zero coupon bonds. Most of the tbills sold are zero coupon
bonds. Your 10 year bonds are coupon bonds.
You didn't read what I wrote carefully enough - my example above was
for a 91-day T-Bill.
Default User
2017-05-02 21:24:11 UTC
Permalink
Raw Message
Post by Scott Lurndal
The treasury stopped selling 30-year bonds several years ago. They
still offer 10-year and TIPS.
I hate to get involved in one these threads, but that's no longer correct. From Treasury:

30-year Treasury constant maturity series was discontinued on February 18, 2002 and reintroduced on February 9, 2006. From February 18, 2002 to February 8, 2006, Treasury published alternatives to a 30-year rate. See Long-Term Average Rate for more information.

Treasury discontinued the 20-year constant maturity series at the end of calendar year 1986 and reinstated that series on October 1, 1993. As a result, there are no 20-year rates available for the time period January 1, 1987 through September 30, 1993.


<https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield>


Brian
-dsr-
2017-05-03 00:45:19 UTC
Permalink
Raw Message
Post by Scott Lurndal
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount.
About $8 trillion a year, in fact.
Post by Scott Lurndal
Post by Lynn McGuire
Anyway, if the bond market crashes then that means
that the bond prices crash, thus changing the effective interest rates.
No, it means that _if the bond is sold_ the effective discount rate
will change. If the bond is held to maturity, the entire value of the
bond will be returned to the bondholder, and the bondholder will get
the coupons at the issue rate until maturity.
Post by Lynn McGuire
There are enough bonds out there that the USA cannot buy all of the
existing bonds back if the market got flooded with them.
Why would the US ever _want_ to buy them back? They'll
be redeemed as they mature. And the expensive bonds, 30-year
with coupons at 9+%, are all maturing (and being replaced with
much less expensive (to the american public) shorter-term debt instruments).
Lynn's reviewed book postulates that the bonds are being offered for resale
at a price much, much lower than their face value. It could easily be to the
US government's advantage to buy them back at this price, paying USD that
they print as needed.

Oh, and having USD circulate outside the borders of the US is also an effective
loan to the US government.

It appears that Lynn's author believes that the US government's finances is
run the same way a household's is.

-dsr-
Dimensional Traveler
2017-05-03 02:45:53 UTC
Permalink
Raw Message
Post by -dsr-
Post by Scott Lurndal
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount.
About $8 trillion a year, in fact.
Post by Scott Lurndal
Post by Lynn McGuire
Anyway, if the bond market crashes then that means
that the bond prices crash, thus changing the effective interest rates.
No, it means that _if the bond is sold_ the effective discount rate
will change. If the bond is held to maturity, the entire value of the
bond will be returned to the bondholder, and the bondholder will get
the coupons at the issue rate until maturity.
Post by Lynn McGuire
There are enough bonds out there that the USA cannot buy all of the
existing bonds back if the market got flooded with them.
Why would the US ever _want_ to buy them back? They'll
be redeemed as they mature. And the expensive bonds, 30-year
with coupons at 9+%, are all maturing (and being replaced with
much less expensive (to the american public) shorter-term debt instruments).
Lynn's reviewed book postulates that the bonds are being offered for resale
at a price much, much lower than their face value. It could easily be to the
US government's advantage to buy them back at this price, paying USD that
they print as needed.
Oh, and having USD circulate outside the borders of the US is also an effective
loan to the US government.
It appears that Lynn's author believes that the US government's finances is
run the same way a household's is.
There are other countries that use US Dollars as their official
currency. Granted they are small countries but they obviously feel US
currency is stable and strong or they wouldn't use it.
--
Some days you just don't have enough middle fingers!
Cryptoengineer
2017-05-03 03:48:56 UTC
Permalink
Raw Message
Post by Dimensional Traveler
Post by -dsr-
Post by Scott Lurndal
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale, they
don't change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills
each month. Most ??? of these are zero coupon bonds and are sold
at a discount.
About $8 trillion a year, in fact.
Post by Scott Lurndal
Post by Lynn McGuire
Anyway, if the bond market crashes then that means
that the bond prices crash, thus changing the effective interest rates.
No, it means that _if the bond is sold_ the effective discount rate
will change. If the bond is held to maturity, the entire value of
the bond will be returned to the bondholder, and the bondholder will
get the coupons at the issue rate until maturity.
Post by Lynn McGuire
There are enough bonds out there that the USA cannot buy all of the
existing bonds back if the market got flooded with them.
Why would the US ever _want_ to buy them back? They'll
be redeemed as they mature. And the expensive bonds, 30-year
with coupons at 9+%, are all maturing (and being replaced with
much less expensive (to the american public) shorter-term debt instruments).
Lynn's reviewed book postulates that the bonds are being offered for
resale at a price much, much lower than their face value. It could
easily be to the US government's advantage to buy them back at this
price, paying USD that they print as needed.
Oh, and having USD circulate outside the borders of the US is also an
effective loan to the US government.
It appears that Lynn's author believes that the US government's
finances is run the same way a household's is.
There are other countries that use US Dollars as their official
currency. Granted they are small countries but they obviously feel US
currency is stable and strong or they wouldn't use it.
I think the notion is that offering US Bonds at way below face value
makes it difficult for the US to raise new money via bonds, since if
you're offered the same bond for $20 face value bond for $10 by
China, and $15 by the US, you'll buy it from the Chinese, not the US.

Of course, China is *also* losing money by doing this; and the US would
be well advised to snap up the bonds so it doesn't have to pay the
face value down the line.

Unless there's reason to think that the US economy is in trouble, and
the US will default on the face value or haave huge inflation, its not
clear to me that even dumping $1 Trillion in T-Bills would have much
effect. In fact, China, with a $8T GDP, would probably be hurt more than
the US, with an $18T GDP.

[BTW, there's about $12T of treasury debt outstanding.]

pt
Peter Trei
2017-05-03 12:57:35 UTC
Permalink
Raw Message
Post by Cryptoengineer
Post by Dimensional Traveler
Post by -dsr-
Post by Scott Lurndal
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale, they
don't change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills
each month. Most ??? of these are zero coupon bonds and are sold
at a discount.
About $8 trillion a year, in fact.
Post by Scott Lurndal
Post by Lynn McGuire
Anyway, if the bond market crashes then that means
that the bond prices crash, thus changing the effective interest rates.
No, it means that _if the bond is sold_ the effective discount rate
will change. If the bond is held to maturity, the entire value of
the bond will be returned to the bondholder, and the bondholder will
get the coupons at the issue rate until maturity.
Post by Lynn McGuire
There are enough bonds out there that the USA cannot buy all of the
existing bonds back if the market got flooded with them.
Why would the US ever _want_ to buy them back? They'll
be redeemed as they mature. And the expensive bonds, 30-year
with coupons at 9+%, are all maturing (and being replaced with
much less expensive (to the american public) shorter-term debt instruments).
Lynn's reviewed book postulates that the bonds are being offered for
resale at a price much, much lower than their face value. It could
easily be to the US government's advantage to buy them back at this
price, paying USD that they print as needed.
Oh, and having USD circulate outside the borders of the US is also an
effective loan to the US government.
It appears that Lynn's author believes that the US government's
finances is run the same way a household's is.
There are other countries that use US Dollars as their official
currency. Granted they are small countries but they obviously feel US
currency is stable and strong or they wouldn't use it.
I think the notion is that offering US Bonds at way below face value
makes it difficult for the US to raise new money via bonds, since if
you're offered the same bond for $20 face value bond for $10 by
China, and $15 by the US, you'll buy it from the Chinese, not the US.
Of course, China is *also* losing money by doing this; and the US would
be well advised to snap up the bonds so it doesn't have to pay the
face value down the line.
Unless there's reason to think that the US economy is in trouble, and
the US will default on the face value or haave huge inflation, its not
clear to me that even dumping $1 Trillion in T-Bills would have much
effect. In fact, China, with a $8T GDP, would probably be hurt more than
the US, with an $18T GDP.
[BTW, there's about $12T of treasury debt outstanding.]
pt
Followup:

Found this interesting graphic and article:

https://www.titlemax.com/discovery-center/money-finance/debts-owed-by-the-us-and-owed-to-the-us/
Lynn McGuire
2017-05-03 17:36:57 UTC
Permalink
Raw Message
On 5/2/2017 9:45 PM, Dimensional Traveler wrote:
...
Post by Dimensional Traveler
Post by -dsr-
Lynn's reviewed book postulates that the bonds are being offered for resale
at a price much, much lower than their face value. It could easily be to the
US government's advantage to buy them back at this price, paying USD that
they print as needed.
Oh, and having USD circulate outside the borders of the US is also an effective
loan to the US government.
It appears that Lynn's author believes that the US government's finances is
run the same way a household's is.
There are other countries that use US Dollars as their official
currency. Granted they are small countries but they obviously feel US
currency is stable and strong or they wouldn't use it.
The USA Dollar is the reserve currency of the world. We won WWII and
dictated the financial terms to the world. We did not demand
reparations but we did demand that all inter-country financial
transactions use the precursor of todays's SWIFT system which is based
on USA Dollars.

Today, China and Russia are trying to establish a new basket of
currencies for the reserve currency. It is not working yet. It may
never work.

Plus, China has been buying oil from the Russians using yuan for a
couple of years now. The USA is very unhappy about those transactions
not occurring in USA Dollars.

Lynn
Scott Lurndal
2017-05-03 19:53:36 UTC
Permalink
Raw Message
Post by Lynn McGuire
...
Post by Dimensional Traveler
Post by -dsr-
Lynn's reviewed book postulates that the bonds are being offered for resale
at a price much, much lower than their face value. It could easily be to the
US government's advantage to buy them back at this price, paying USD that
they print as needed.
Oh, and having USD circulate outside the borders of the US is also an effective
loan to the US government.
It appears that Lynn's author believes that the US government's finances is
run the same way a household's is.
There are other countries that use US Dollars as their official
currency. Granted they are small countries but they obviously feel US
currency is stable and strong or they wouldn't use it.
The USA Dollar is the reserve currency of the world.
Arguable.
Post by Lynn McGuire
We won WWII and
The allies won WWII.
Post by Lynn McGuire
dictated the financial terms to the world.
Not correct at all.
Post by Lynn McGuire
Plus, China has been buying oil from the Russians using yuan for a
couple of years now. The USA is very unhappy about those transactions
not occurring in USA Dollars.
Cite please, for both assertions.
Lynn McGuire
2017-05-03 21:32:03 UTC
Permalink
Raw Message
Post by Scott Lurndal
Post by Lynn McGuire
...
Post by Dimensional Traveler
Post by -dsr-
Lynn's reviewed book postulates that the bonds are being offered for resale
at a price much, much lower than their face value. It could easily be to the
US government's advantage to buy them back at this price, paying USD that
they print as needed.
Oh, and having USD circulate outside the borders of the US is also an effective
loan to the US government.
It appears that Lynn's author believes that the US government's finances is
run the same way a household's is.
There are other countries that use US Dollars as their official
currency. Granted they are small countries but they obviously feel US
currency is stable and strong or they wouldn't use it.
The USA Dollar is the reserve currency of the world.
Arguable.
Post by Lynn McGuire
We won WWII and
The allies won WWII.
Post by Lynn McGuire
dictated the financial terms to the world.
Not correct at all.
Post by Lynn McGuire
Plus, China has been buying oil from the Russians using yuan for a
couple of years now. The USA is very unhappy about those transactions
not occurring in USA Dollars.
Cite please, for both assertions.
Just a simple google away, my friend.

http://www.globalresearch.ca/the-petro-yuan-versus-dollar-hegemony-china-and-russias-big-bet/5526236

Lynn
J. Clarke
2017-05-04 07:44:30 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by Scott Lurndal
Post by Lynn McGuire
...
Post by Dimensional Traveler
Post by -dsr-
Lynn's reviewed book postulates that the bonds are being offered for resale
at a price much, much lower than their face value. It could easily be to the
US government's advantage to buy them back at this price, paying USD that
they print as needed.
Oh, and having USD circulate outside the borders of the US is also an effective
loan to the US government.
It appears that Lynn's author believes that the US government's finances is
run the same way a household's is.
There are other countries that use US Dollars as their official
currency. Granted they are small countries but they obviously feel US
currency is stable and strong or they wouldn't use it.
The USA Dollar is the reserve currency of the world.
Arguable.
Post by Lynn McGuire
We won WWII and
The allies won WWII.
Post by Lynn McGuire
dictated the financial terms to the world.
Not correct at all.
Post by Lynn McGuire
Plus, China has been buying oil from the Russians using yuan for a
couple of years now. The USA is very unhappy about those transactions
not occurring in USA Dollars.
Cite please, for both assertions.
Just a simple google away, my friend.
http://www.globalresearch.ca/the-petro-yuan-versus-dollar-hegemony-china-and-russias-big-bet/5526236
Lynn
I can see how it's good for China--they get to buy oil without using
foreign exchange--but the Russians end up with a great stack of Chinese
money--of coures the Chinese can vastly outproduce the Russians and
typically with better workmanship so trading that back for Chinese goods
isn't a terrible option. However Putin really should be concerned that the
Chinese can outproduce him with better quality.
h***@gmail.com
2017-05-04 07:47:28 UTC
Permalink
Raw Message
Post by J. Clarke
I can see how it's good for China--they get to buy oil without using
foreign exchange--but the Russians end up with a great stack of Chinese
money--of coures the Chinese can vastly outproduce the Russians and
typically with better workmanship so trading that back for Chinese goods
isn't a terrible option. However Putin really should be concerned that the
Chinese can outproduce him with better quality.
What's he care provided he gets his cut?
Lawrence Watt-Evans
2017-05-06 21:12:52 UTC
Permalink
Raw Message
On Thu, 4 May 2017 03:44:30 -0400, "J. Clarke"
Post by J. Clarke
Post by Lynn McGuire
Post by Scott Lurndal
Post by Lynn McGuire
Plus, China has been buying oil from the Russians using yuan for a
couple of years now. The USA is very unhappy about those transactions
not occurring in USA Dollars.
Cite please, for both assertions.
Just a simple google away, my friend.
http://www.globalresearch.ca/the-petro-yuan-versus-dollar-hegemony-china-and-russias-big-bet/5526236
I can see how it's good for China--they get to buy oil without using
foreign exchange--but the Russians end up with a great stack of Chinese
money--of coures the Chinese can vastly outproduce the Russians and
typically with better workmanship so trading that back for Chinese goods
isn't a terrible option. However Putin really should be concerned that the
Chinese can outproduce him with better quality.
You're assuming Putin has any comprehension at all of macroeconomics.
There is no evidence to support this; he seems to have been quite
happy to tank Russia's economy with his military adventures.
--
My webpage is at http://www.watt-evans.com
J. Clarke
2017-05-06 23:32:25 UTC
Permalink
Raw Message
Post by Lawrence Watt-Evans
On Thu, 4 May 2017 03:44:30 -0400, "J. Clarke"
Post by J. Clarke
Post by Lynn McGuire
Post by Scott Lurndal
Post by Lynn McGuire
Plus, China has been buying oil from the Russians using yuan for a
couple of years now. The USA is very unhappy about those transactions
not occurring in USA Dollars.
Cite please, for both assertions.
Just a simple google away, my friend.
http://www.globalresearch.ca/the-petro-yuan-versus-dollar-hegemony-china-and-russias-big-bet/5526236
I can see how it's good for China--they get to buy oil without using
foreign exchange--but the Russians end up with a great stack of Chinese
money--of coures the Chinese can vastly outproduce the Russians and
typically with better workmanship so trading that back for Chinese goods
isn't a terrible option. However Putin really should be concerned that the
Chinese can outproduce him with better quality.
You're assuming Putin has any comprehension at all of macroeconomics.
There is no evidence to support this; he seems to have been quite
happy to tank Russia's economy with his military adventures.
Speaking of which, one wonders if he realizes that a point is coming where
China will be able to digest Russia militarily without a hiccup? Assuming
of course that the Chinese don't just buy the place. And assuming that
they want it.
Cryptoengineer
2017-05-07 02:17:28 UTC
Permalink
Raw Message
Post by J. Clarke
Post by Lawrence Watt-Evans
On Thu, 4 May 2017 03:44:30 -0400, "J. Clarke"
Post by J. Clarke
Post by Lynn McGuire
Post by Scott Lurndal
Post by Lynn McGuire
Plus, China has been buying oil from the Russians using yuan
for a couple of years now. The USA is very unhappy about those
transactions not occurring in USA Dollars.
Cite please, for both assertions.
Just a simple google away, my friend.
http://www.globalresearch.ca/the-petro-yuan-versus-dollar-hegemony-
china-and-russias-big-bet/5526236
I can see how it's good for China--they get to buy oil without using
foreign exchange--but the Russians end up with a great stack of
Chinese money--of coures the Chinese can vastly outproduce the
Russians and typically with better workmanship so trading that back
for Chinese goods isn't a terrible option. However Putin really
should be concerned that the Chinese can outproduce him with better
quality.
You're assuming Putin has any comprehension at all of macroeconomics.
There is no evidence to support this; he seems to have been quite
happy to tank Russia's economy with his military adventures.
Speaking of which, one wonders if he realizes that a point is coming
where China will be able to digest Russia militarily without a hiccup?
Assuming of course that the Chinese don't just buy the place. And
assuming that they want it.
Russia still has a significant nuclear deterant. No nuclear power has
ever been successfully invaded.

pt
J. Clarke
2017-05-07 02:33:39 UTC
Permalink
Raw Message
Post by Cryptoengineer
Post by J. Clarke
Post by Lawrence Watt-Evans
On Thu, 4 May 2017 03:44:30 -0400, "J. Clarke"
Post by J. Clarke
Post by Lynn McGuire
Post by Scott Lurndal
Post by Lynn McGuire
Plus, China has been buying oil from the Russians using yuan
for a couple of years now. The USA is very unhappy about those
transactions not occurring in USA Dollars.
Cite please, for both assertions.
Just a simple google away, my friend.
http://www.globalresearch.ca/the-petro-yuan-versus-dollar-hegemony-
china-and-russias-big-bet/5526236
I can see how it's good for China--they get to buy oil without using
foreign exchange--but the Russians end up with a great stack of
Chinese money--of coures the Chinese can vastly outproduce the
Russians and typically with better workmanship so trading that back
for Chinese goods isn't a terrible option. However Putin really
should be concerned that the Chinese can outproduce him with better
quality.
You're assuming Putin has any comprehension at all of macroeconomics.
There is no evidence to support this; he seems to have been quite
happy to tank Russia's economy with his military adventures.
Speaking of which, one wonders if he realizes that a point is coming
where China will be able to digest Russia militarily without a hiccup?
Assuming of course that the Chinese don't just buy the place. And
assuming that they want it.
Russia still has a significant nuclear deterant. No nuclear power has
ever been successfully invaded.
Nobody has ever been unsuccessfully invade either. What of it?

The Chinese could take 90 percent casualties and still be bigger than
Russia but a lot of their population pressure would be alleviated--they
might decide to take the hit. And you're assuming that Russia's nuclear
deterrent actually works--Putin might give the order and find that nothing
much happens.
Lawrence Watt-Evans
2017-05-08 06:47:49 UTC
Permalink
Raw Message
On Sat, 6 May 2017 19:32:25 -0400, "J. Clarke"
Post by J. Clarke
Post by Lawrence Watt-Evans
On Thu, 4 May 2017 03:44:30 -0400, "J. Clarke"
Post by J. Clarke
Post by Lynn McGuire
Post by Scott Lurndal
Post by Lynn McGuire
Plus, China has been buying oil from the Russians using yuan for a
couple of years now. The USA is very unhappy about those transactions
not occurring in USA Dollars.
Cite please, for both assertions.
Just a simple google away, my friend.
http://www.globalresearch.ca/the-petro-yuan-versus-dollar-hegemony-china-and-russias-big-bet/5526236
I can see how it's good for China--they get to buy oil without using
foreign exchange--but the Russians end up with a great stack of Chinese
money--of coures the Chinese can vastly outproduce the Russians and
typically with better workmanship so trading that back for Chinese goods
isn't a terrible option. However Putin really should be concerned that the
Chinese can outproduce him with better quality.
You're assuming Putin has any comprehension at all of macroeconomics.
There is no evidence to support this; he seems to have been quite
happy to tank Russia's economy with his military adventures.
Speaking of which, one wonders if he realizes that a point is coming where
China will be able to digest Russia militarily without a hiccup? Assuming
of course that the Chinese don't just buy the place. And assuming that
they want it.
I have a partially-written SF novel where there are noticeably fewer
nations on Earth, and China extends as far west as the Polish/EU
border, having absorbed Russia and a few other Eurasian countries.
(China also annexed Korea in that setting, but Japan went to the
Australian/Indonesian merged state, Australasia.)

Historically, Siberia became part of Russia because the Chinese
_didn't_ want it, at least not enough to fight anyone for it, but
opinions can change.
--
My webpage is at http://www.watt-evans.com
Lynn McGuire
2017-05-08 20:11:17 UTC
Permalink
Raw Message
Post by Lawrence Watt-Evans
On Sat, 6 May 2017 19:32:25 -0400, "J. Clarke"
Post by J. Clarke
Post by Lawrence Watt-Evans
On Thu, 4 May 2017 03:44:30 -0400, "J. Clarke"
Post by J. Clarke
Post by Lynn McGuire
Post by Scott Lurndal
Post by Lynn McGuire
Plus, China has been buying oil from the Russians using yuan for a
couple of years now. The USA is very unhappy about those transactions
not occurring in USA Dollars.
Cite please, for both assertions.
Just a simple google away, my friend.
http://www.globalresearch.ca/the-petro-yuan-versus-dollar-hegemony-china-and-russias-big-bet/5526236
I can see how it's good for China--they get to buy oil without using
foreign exchange--but the Russians end up with a great stack of Chinese
money--of coures the Chinese can vastly outproduce the Russians and
typically with better workmanship so trading that back for Chinese goods
isn't a terrible option. However Putin really should be concerned that the
Chinese can outproduce him with better quality.
You're assuming Putin has any comprehension at all of macroeconomics.
There is no evidence to support this; he seems to have been quite
happy to tank Russia's economy with his military adventures.
Speaking of which, one wonders if he realizes that a point is coming where
China will be able to digest Russia militarily without a hiccup? Assuming
of course that the Chinese don't just buy the place. And assuming that
they want it.
I have a partially-written SF novel where there are noticeably fewer
nations on Earth, and China extends as far west as the Polish/EU
border, having absorbed Russia and a few other Eurasian countries.
(China also annexed Korea in that setting, but Japan went to the
Australian/Indonesian merged state, Australasia.)
Historically, Siberia became part of Russia because the Chinese
_didn't_ want it, at least not enough to fight anyone for it, but
opinions can change.
There is at least one recent book where the Chinese take Siberia just
for the women to balance their population out.

Lynn
Juho Julkunen
2017-05-09 00:33:34 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by Lawrence Watt-Evans
Historically, Siberia became part of Russia because the Chinese
_didn't_ want it, at least not enough to fight anyone for it, but
opinions can change.
There is at least one recent book where the Chinese take Siberia just
for the women to balance their population out.
What do they do to fix the next generation?
--
Juho Julkunen
Carl Fink
2017-05-09 00:40:37 UTC
Permalink
Raw Message
Post by Juho Julkunen
Post by Lynn McGuire
Post by Lawrence Watt-Evans
Historically, Siberia became part of Russia because the Chinese
_didn't_ want it, at least not enough to fight anyone for it, but
opinions can change.
There is at least one recent book where the Chinese take Siberia just
for the women to balance their population out.
What do they do to fix the next generation?
Ban abortions and infanticide?
--
Carl Fink ***@nitpicking.com

Read my blog at blog.nitpicking.com. Reviews! Observations!
Stupid mistakes you can correct!
Juho Julkunen
2017-05-09 01:34:11 UTC
Permalink
Raw Message
In article <***@panix2.panix.com>, ***@panix.com
says...
Post by Carl Fink
Post by Juho Julkunen
Post by Lynn McGuire
Post by Lawrence Watt-Evans
Historically, Siberia became part of Russia because the Chinese
_didn't_ want it, at least not enough to fight anyone for it, but
opinions can change.
There is at least one recent book where the Chinese take Siberia just
for the women to balance their population out.
What do they do to fix the next generation?
Ban abortions and infanticide?
Let's not get carried away.
--
Juho Julkunen
Lawrence Watt-Evans
2017-05-09 04:35:10 UTC
Permalink
Raw Message
Post by Carl Fink
Post by Juho Julkunen
Post by Lynn McGuire
Post by Lawrence Watt-Evans
Historically, Siberia became part of Russia because the Chinese
_didn't_ want it, at least not enough to fight anyone for it, but
opinions can change.
There is at least one recent book where the Chinese take Siberia just
for the women to balance their population out.
What do they do to fix the next generation?
Ban abortions and infanticide?
They've already lifted the one-child-per-family rule, which should
help.
--
My webpage is at http://www.watt-evans.com
Juho Julkunen
2017-05-09 22:57:37 UTC
Permalink
Raw Message
Post by Lawrence Watt-Evans
Post by Carl Fink
Post by Juho Julkunen
Post by Lynn McGuire
Post by Lawrence Watt-Evans
Historically, Siberia became part of Russia because the Chinese
_didn't_ want it, at least not enough to fight anyone for it, but
opinions can change.
There is at least one recent book where the Chinese take Siberia just
for the women to balance their population out.
What do they do to fix the next generation?
Ban abortions and infanticide?
They've already lifted the one-child-per-family rule, which should
help.
You might think that, but it's actually not certain the one child
policy did all that much to China's fertility rate.

http://scholar.harvard.edu/files/martinwhyte/files/challenging_myths_pu
blished_version.pdf

As long as the Chinese prefer male children and fertility remains low,
the imbalance will persist.

(In less developed countries male preference leads families to have
more children until desired number of boys is attained, which raises
total fertility rate, but doesn't distort gender ratio on national
level.)
--
Juho Julkunen
Scott Lurndal
2017-05-04 12:49:10 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by Scott Lurndal
Post by Lynn McGuire
Plus, China has been buying oil from the Russians using yuan for a
couple of years now. The USA is very unhappy about those transactions
not occurring in USA Dollars.
Cite please, for both assertions.
Just a simple google away, my friend.
http://www.globalresearch.ca/the-petro-yuan-versus-dollar-hegemony-china-and-russias-big-bet/5526236
Why shouldn't russia and china trade using local currencies? It's
their perogative.

You didn't cite evidence for "the USA is very unhappy about those transactions
not occuring in USA dollars". It may be the case that the Oil
industry in the USA is unhappy about it, but so what? They only care
about their profits.

Oddly, Global research claims things like: http://www.globalresearch.ca/about

"Since 2004, Global Research has provided detailed analysis
and coverage of US-NATO-Israel preparations to wage a pre-emptive
nuclear attack on Iran."
Dimensional Traveler
2017-05-03 22:03:55 UTC
Permalink
Raw Message
Post by Scott Lurndal
Post by Lynn McGuire
...
Post by Dimensional Traveler
Post by -dsr-
Lynn's reviewed book postulates that the bonds are being offered for resale
at a price much, much lower than their face value. It could easily be to the
US government's advantage to buy them back at this price, paying USD that
they print as needed.
Oh, and having USD circulate outside the borders of the US is also an effective
loan to the US government.
It appears that Lynn's author believes that the US government's finances is
run the same way a household's is.
There are other countries that use US Dollars as their official
currency. Granted they are small countries but they obviously feel US
currency is stable and strong or they wouldn't use it.
The USA Dollar is the reserve currency of the world.
Arguable.
Post by Lynn McGuire
We won WWII and
The allies won WWII.
Post by Lynn McGuire
dictated the financial terms to the world.
Not correct at all.
Post by Lynn McGuire
Plus, China has been buying oil from the Russians using yuan for a
couple of years now. The USA is very unhappy about those transactions
not occurring in USA Dollars.
Cite please, for both assertions.
You snipped an attribution and are responding to someone else.
--
Some days you just don't have enough middle fingers!
J. Clarke
2017-05-04 07:30:09 UTC
Permalink
Raw Message
Post by Dimensional Traveler
Post by -dsr-
Post by Scott Lurndal
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount.
About $8 trillion a year, in fact.
Post by Scott Lurndal
Post by Lynn McGuire
Anyway, if the bond market crashes then that means
that the bond prices crash, thus changing the effective interest rates.
No, it means that _if the bond is sold_ the effective discount rate
will change. If the bond is held to maturity, the entire value of the
bond will be returned to the bondholder, and the bondholder will get
the coupons at the issue rate until maturity.
Post by Lynn McGuire
There are enough bonds out there that the USA cannot buy all of the
existing bonds back if the market got flooded with them.
Why would the US ever _want_ to buy them back? They'll
be redeemed as they mature. And the expensive bonds, 30-year
with coupons at 9+%, are all maturing (and being replaced with
much less expensive (to the american public) shorter-term debt instruments).
Lynn's reviewed book postulates that the bonds are being offered for resale
at a price much, much lower than their face value. It could easily be to the
US government's advantage to buy them back at this price, paying USD that
they print as needed.
Oh, and having USD circulate outside the borders of the US is also an effective
loan to the US government.
It appears that Lynn's author believes that the US government's finances is
run the same way a household's is.
There are other countries that use US Dollars as their official
currency. Granted they are small countries but they obviously feel US
currency is stable and strong or they wouldn't use it.
It doesn't have to be stable or strong in any absolute sense to be
sufficiently more stable and strong than some local currrencies to be a
desirable alternative.
Greg Goss
2017-05-03 14:15:34 UTC
Permalink
Raw Message
Post by -dsr-
It could easily be to the
US government's advantage to buy them back at this price, paying USD that
they print as needed.
I posted my other objection to your plan before reading this one.
Printing money on demand can be a problem. I have a 50 billion
deutschmark note and a pair of 100 trillion dollar Zimbabwe notes on
my desk at work. The German note was bought in the mid-twokays when I
was expecting the US to pick up your answer. The Zimbabwe notes were
bought to replace one given to me in that period by a gold mine
promoter - I accidentally destroyed a 500 million dollar bill with
food stains.
--
We are geeks. Resistance is voltage over current.
Lynn McGuire
2017-05-03 17:31:01 UTC
Permalink
Raw Message
Post by -dsr-
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount.
About $8 trillion a year, in fact.
Wow, way more than I thought. Continuously rolling the tbills around
does keep the average interest rate lower thought.

Lynn
Lynn McGuire
2017-05-03 19:41:24 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by -dsr-
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount.
About $8 trillion a year, in fact.
Wow, way more than I thought. Continuously rolling the tbills around
does keep the average interest rate lower thought.
Lynn
^thought^though

Lynn
Dimensional Traveler
2017-05-03 22:02:41 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by Lynn McGuire
Post by -dsr-
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount.
About $8 trillion a year, in fact.
Wow, way more than I thought. Continuously rolling the tbills around
does keep the average interest rate lower thought.
Lynn
^thought^though
Which one of your thoughts is not a thought? :)
--
Some days you just don't have enough middle fingers!
Lynn McGuire
2017-05-03 23:39:15 UTC
Permalink
Raw Message
Post by Dimensional Traveler
Post by Lynn McGuire
Post by Lynn McGuire
Post by -dsr-
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount.
About $8 trillion a year, in fact.
Wow, way more than I thought. Continuously rolling the tbills around
does keep the average interest rate lower thought.
Lynn
^thought^though
Which one of your thoughts is not a thought? :)
The latter. Sigh. I been debugging Fortran bytecode for weeks now and
it has dropped my normal incompetence into new lows. But, I just
finally extended our Fortran tokenizer and bytecode interpreter into
allowing secondary indexes.

Lynn
Dimensional Traveler
2017-05-03 23:43:45 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by Dimensional Traveler
Post by Lynn McGuire
Post by Lynn McGuire
Post by -dsr-
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount.
About $8 trillion a year, in fact.
Wow, way more than I thought. Continuously rolling the tbills
around does keep the average interest rate lower thought.
Lynn
^thought^though
Which one of your thoughts is not a thought? :)
The latter. Sigh. I been debugging Fortran bytecode for weeks now and
it has dropped my normal incompetence into new lows. But, I just
finally extended our Fortran tokenizer and bytecode interpreter into
allowing secondary indexes.
Oh deer gawd, I haven't touched Fortran in *thinks* at least 25 years.
--
Some days you just don't have enough middle fingers!
Lynn McGuire
2017-05-03 23:57:13 UTC
Permalink
Raw Message
Post by Dimensional Traveler
Post by Lynn McGuire
Post by Dimensional Traveler
Post by Lynn McGuire
Post by Lynn McGuire
Post by -dsr-
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount.
About $8 trillion a year, in fact.
Wow, way more than I thought. Continuously rolling the tbills
around does keep the average interest rate lower thought.
Lynn
^thought^though
Which one of your thoughts is not a thought? :)
The latter. Sigh. I been debugging Fortran bytecode for weeks now
and it has dropped my normal incompetence into new lows. But, I just
finally extended our Fortran tokenizer and bytecode interpreter into
allowing secondary indexes.
Oh deer gawd, I haven't touched Fortran in *thinks* at least 25 years.
I've got 700,000 lines of F77 code that I slog around the place. Plus
500,000 lines of C++. Plus we have a F66 compiler / interpreter built
into our software for custom calculations by the users. It is as
horrible as you can imagine.

Lynn
Peter Trei
2017-05-04 17:12:33 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by Dimensional Traveler
Post by Lynn McGuire
Post by Dimensional Traveler
Post by Lynn McGuire
Post by Lynn McGuire
Post by -dsr-
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale,
they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount.
About $8 trillion a year, in fact.
Wow, way more than I thought. Continuously rolling the tbills
around does keep the average interest rate lower thought.
Lynn
^thought^though
Which one of your thoughts is not a thought? :)
The latter. Sigh. I been debugging Fortran bytecode for weeks now
and it has dropped my normal incompetence into new lows. But, I just
finally extended our Fortran tokenizer and bytecode interpreter into
allowing secondary indexes.
Oh deer gawd, I haven't touched Fortran in *thinks* at least 25 years.
I've got 700,000 lines of F77 code that I slog around the place. Plus
500,000 lines of C++. Plus we have a F66 compiler / interpreter built
into our software for custom calculations by the users. It is as
horrible as you can imagine.
Lynn
Here's something for your copious spare time (via Network Neutrality Squad):
- start quote -

Nasa runs competition to help make old Fortran code faster

http://www.bbc.com/news/technology-39803425

[NASA] is running a competition that will share $55,000
between the top two people who can make its FUN3D software run
up to 10,000 times faster. The FUN3D code is used to model how
air flows around simulated aircraft in a supercomputer. The
software was developed in the 1980s and is written in an older
computer programming language called Fortran. "This is the
ultimate 'geek' dream assignment," said Doug Rohn, head of
Nasa's transformative aeronautics concepts program that makes
heavy use of the FUN3D code.
- end quote -

pt
Lynn McGuire
2017-05-04 17:58:41 UTC
Permalink
Raw Message
Post by Peter Trei
Post by Lynn McGuire
Post by Dimensional Traveler
Post by Lynn McGuire
Post by Dimensional Traveler
Post by Lynn McGuire
Post by Lynn McGuire
Post by -dsr-
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale,
they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount.
About $8 trillion a year, in fact.
Wow, way more than I thought. Continuously rolling the tbills
around does keep the average interest rate lower thought.
Lynn
^thought^though
Which one of your thoughts is not a thought? :)
The latter. Sigh. I been debugging Fortran bytecode for weeks now
and it has dropped my normal incompetence into new lows. But, I just
finally extended our Fortran tokenizer and bytecode interpreter into
allowing secondary indexes.
Oh deer gawd, I haven't touched Fortran in *thinks* at least 25 years.
I've got 700,000 lines of F77 code that I slog around the place. Plus
500,000 lines of C++. Plus we have a F66 compiler / interpreter built
into our software for custom calculations by the users. It is as
horrible as you can imagine.
Lynn
- start quote -
Nasa runs competition to help make old Fortran code faster
http://www.bbc.com/news/technology-39803425
[NASA] is running a competition that will share $55,000
between the top two people who can make its FUN3D software run
up to 10,000 times faster. The FUN3D code is used to model how
air flows around simulated aircraft in a supercomputer. The
software was developed in the 1980s and is written in an older
computer programming language called Fortran. "This is the
ultimate 'geek' dream assignment," said Doug Rohn, head of
Nasa's transformative aeronautics concepts program that makes
heavy use of the FUN3D code.
- end quote -
pt
No freaking way. I have the source code from NASA's Gibbs Free Energy
Reactor program. I did not think so but it is worse code than our
Fortran code.

Lynn
Don Kuenz
2017-05-04 00:52:10 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by Lynn McGuire
Post by -dsr-
Post by Lynn McGuire
Post by -dsr-
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount.
About $8 trillion a year, in fact.
Wow, way more than I thought. Continuously rolling the tbills around
does keep the average interest rate lower thought.
Lynn
^thought^though
The loans must roll because a rolling loan gathers no loss.

Thank you,

--
Don Kuenz KB7RPU
Magewolf
2017-05-03 20:59:29 UTC
Permalink
Raw Message
Post by Lynn McGuire
Post by -dsr-
Post by Lynn McGuire
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
That's not how bonds work.
A bond is a promise to pay back a certain amount of money with a certain
amount of interest at a defined time in the future. Hence "six month" T-bills
and "ten year" T-bills.
If China wants to sell all their bonds, they need a counterparty to
buy them. You can't force redemption early. (With some bonds, the bond
issuer can offer early redemption at the full price, or at a tiny discount,
but not all.)
So if China and Japan both sell all their T-bills, somebody needs to be
interested in buying them, and the price will be denominated in... I don't
know, what is China going to want that other people will give them?
Anyway, interest rates for bonds are set at the time of sale, they don't
change.
-dsr-
The USA sells $100 ??? billion to $500 ??? billion of new tbills each
month. Most ??? of these are zero coupon bonds and are sold at a
discount. There are no interest payments, the payment is the face value
of the bond when it is turned in at the maturation time. If a one year
bond face value is $1,000,000 and it is sold for $900,000 at the bond
auction, the initial interest rate is 11.1%. But, the buyer can turn
around and sell that bond to someone else for a mutually agreeable
price, thus changing the effective interest rate to the buyer. But, the
bond face value never changes.
The USA is continuously redeeming bonds and issuing new bonds. The
average turnover in the entire debt of the USA is less than a couple of
years at the moment. Long bonds are rarely sold compared to three month
and one year bonds. Anyway, if the bond market crashes then that means
that the bond prices crash, thus changing the effective interest rates.
New bonds being sold are reflective of the existing bond market, thus if
the bond market is flooded with five trillion dollars of existing bonds
over six weeks, the entire market prices will crash to reflect all of
the available stock being sold.
There are enough bonds out there that the USA cannot buy all of the
existing bonds back if the market got flooded with them. After all, who
would accept dollars at that point since the bond is a reflection of the
value of the USA dollar ?
Lynn
What would happen would be a lot of people buying bonds. While China and
Japan just destroyed trillions of their own assets if they are dumping
them much below market value. Bonds are based on trust in the USA
economy and barring something else going on this would have very little
long term effect on the USA economy.

This is just like the EMP thing. The USA is incredibly robust and could
just plow through most disasters with little long term effects. So they
have to basically completely ignore reality to make these books work.
Lynn McGuire
2017-05-03 00:50:15 UTC
Permalink
Raw Message
Post by Lynn McGuire
_Buck Out_ by Ken Benton
https://www.amazon.com/gp/product/1514666979
A singular book, no prequel or sequel, about a financial apocalypse in
the USA. I read the POD (print on demand) version in trade paperback
with very nice paper and fonts. If there is a sequel published, I will
purchase it for reading. In fact, if the author publishes anything
else, I will purchase it.
Of all the apocalyptic scenarios facing the USA, I believe a financial
apocalypse to be of the highest danger, going from a remote concern now
in 2017 to an almost certainty in ten to twenty years. The current debt
of the USA, 20 trillion dollars, is just about equivalent to the USA
GDP. I believe that as the debt of the USA approaches twice the GDP,
the financial stability of the USA will significantly weaken and be
subject to attacks.
The scenario in the book is that China and Japan own 25% of the USA
treasury bills. In a unspecified future date, China decides to sell all
of their USA bonds and notifies Japan that they are going to do so. The
Japanese follow the Chinese and the interest rates for the USA bonds
rise from 3% to 23% over a period of six weeks as the bond markets are
flooded and the bond prices drop precipitously. The Dollar, the
effective reserve currency of the world, also drops significantly in
value compared to other currencies. The stock markets in the USA drop
by 85%. The rest of the story is about our protagonists getting out of
New York City and to their retreat in West Virginia.
My rating: 4.4 out of 5 stars
Amazon rating: 4.4 out of 5 stars (98 reviews)
Lynn
I forgot to mention that the author has a website here:
http://survivaltales.com/

Lynn
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