by OLD1953 » Thu Nov 03, 2011 1:07 am
Myself, I don't think US bonds will become worthless, so I've not really considered the question. But bonds and money aren't the same thing, therefore it would be possible for one to lose value while the other retains value.
I'm seeing the world right now as in a game of chicken, with dozens of simeltaneous players. The first one to crash or flinch will lose. Right now, it appears that Greece is about to crash directly into Europe. China is in the process of crashing, but it's an early stage. The US had a wheel fall off, but got it patched (poorly) and is back in the game.
What happens if Greece defaults, France leaves the EURO and the Italians start yelling for help, which they will by next June? European bonds of all sorts become the kiss of death for an investment firm, and they already are as MF Global found out, so they'll be buying their own bonds or dissolve the EURO. In either case, assuming the US holds together through that period, we become the investment of last resort. Unless, of course, you assume people quit investing and just stuff mattresses.
We have a large population retiring now, and I'd bet their recent experiences in the market, coupled with a new market crash will cause a lot of money to run to US bonds. We really are going down the Japanese path.
Myself, I don't think US bonds will become worthless, so I've not really considered the question. But bonds and money aren't the same thing, therefore it would be possible for one to lose value while the other retains value.
I'm seeing the world right now as in a game of chicken, with dozens of simeltaneous players. The first one to crash or flinch will lose. Right now, it appears that Greece is about to crash directly into Europe. China is in the process of crashing, but it's an early stage. The US had a wheel fall off, but got it patched (poorly) and is back in the game.
What happens if Greece defaults, France leaves the EURO and the Italians start yelling for help, which they will by next June? European bonds of all sorts become the kiss of death for an investment firm, and they already are as MF Global found out, so they'll be buying their own bonds or dissolve the EURO. In either case, assuming the US holds together through that period, we become the investment of last resort. Unless, of course, you assume people quit investing and just stuff mattresses.
We have a large population retiring now, and I'd bet their recent experiences in the market, coupled with a new market crash will cause a lot of money to run to US bonds. We really are going down the Japanese path.