the action of the government spending creates the ESA reserves required for the banks to bid on all the new bonds that are issued, always.
The Australian financial system is not working like that. The only way the bonds can be sold is by accessing the existing pool of money. Perhaps I am misunderstanding what you are saying? The MMT version of reality is just a misrepresentation.
If you select a quote you can create pretty well any meaning you want
Strindberg said
surplus AUD (with effect on ex rates) could only arise from such a process if the sellers could sell back to the RBA/Treasury - which they cannot do. Foreigners selling their bonds on the secondary market makes no difference to the supply and demand for AUD regardless of residency of the participants.
I fail to see your point.
His claim in what i quoted is still wrong... the preceeding scentence does not reverse that error.
OK. Earlier I failed to make it clear that my earlier belief about selling bonds creating surplus currency was wrong and Strindberg was correct, so when you began mocking Strindberg I pointed out (again) he was correct - to emphasise I was in agreement with him on that.
OK. Earlier I failed to make it clear that my earlier belief about selling bonds creating surplus currency was wrong and Strindberg was correct, so when you began mocking Strindberg I pointed out (again) he was correct.
... except, he was wrong in the part I quoted...
If the chinese sell large amunts of au bonds, it will have an impact... he claims it would not.
If the chinese sell large amunts of au bonds, it will have an impact... he claims it would not.
The chinese can probably see plenty of opportunities of moving money out of bonds into something like iron ore or gas production or any number of things that Australia has an abundance of.
The chinese can probably see plenty of opportunities of moving money out of bonds into something like iron ore or gas production or any number of things that Australia has an abundance of.
So what ? It has nothing to do with his claim...
If the chinese decide to sell large amounts of au bonds, do you agree with strindberg that it would not have any impact ?
Currently on both the secondary bond market and on the futures markets bond yields are falling / face value of bonds are rising. This doesn't really fit in with your theory now does it? I mean especially the futures - if people in the market believed that what you are saying is likely to happen, the the futures yields would be *rising* now already - especially for the further dated expires, as opposed to falling, as all the banks and o/s investors rushed to hedge their positions against your projected outcome.
How accurately did FX and VIX futures predict current stockmarket volatility or strength of the USD? Why the hell should I care about a yield curve at a time like this?
Quote:
I think you have an over-simplified view of the mechanics of the government bond market - suggest digging up some threads on this by b_b.
The only reason I would want to look up b_b's posts is if I wanted to see a poor example of someone trying to poo-pooh another's argument by bamboozling everyone with pomposity and technical jargon.
Quote:
Essentially no foreign money is needed to keep the bond market liquid, the action of the government spending creates the ESA reserves required for the banks to bid on all the new bonds that are issued, always. Which they want to do because it is less desirable to be holding excess ESA funds vs government securities. So foreign investors participating or not in future bond issuance is neither here nor there with respect to what drives the yields higher or lower
This is a perfect example of b_b bullshit, you're making reference to an esoteric clearing process to form some vague argument about endless liquidity and the irrelevance of foreign buyers to yields. I can just imagine the reaction should Glenn wriggle his way out of a bond crisis by spouting nonsense like this.
Talk straight or GTFO.
.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness. "Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
One of the narratives I've noticed from property bulls on this forum over the last couple of years is the idea that the RBA still has "plenty of firepower left" i.e. will be able to cut rates, buy currency, bonds, do whatever it takes to keep property prices rising at current levels, so enjoy the ride and house prices to the moon etc etc.
As a counter-argument I've been suggesting that this firepower is non-existant - that only big currencies like the euro and the us dollar have the financial gravitas to make these kinds of manipulations. My argument runs more along the lines that the aussie dollar is at it's core still the pacific peso, and as bigger western nations begin their fiscal tightening cycle we will see a massive wave of capital flight that will sink our dollar into the 50's, force up yields on bonds and ultimately mortgage interest rates, precipitating a housing crash of epic proportions.
Well behold, we now have dramatic evidence that this process is beginning in earnest:
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy