Posted: 2/23/2009 9:59:25 PM EDT
| If the fed becoms insolvent can we loose $ in bonds? Woul'd that if possible make the stock market losses look petty? |
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Quoted:
If the fed becoms insolvent can we loose $ in bonds? Woul'd that if possible make the stock market losses look petty? You can't lose money on new US Treasury bonds bought & held to maturity unless (a) You buy them at a time when demand is so high that the yield is negative (has happened at least once in the last year, as foreign investors scramble into US treasuries for safety), and (b) the govt doesn't default. If the government defaults, it's game over & the US is dead & not coming back... Absent that, you will not lose money on bonds... You may lose purchasing power if inflation takes off... But then again you may gain it if deflation continues.... |
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Quoted:
Quoted:
You may lose purchasing power if inflation takes off... But then again you may gain it if deflation continues.... Short answer–– YES, you can lose money on bonds as everything is relevant to "purchasing power"... A better question is: can I preserve capital using Fed bonds in this market? And, that begs the question: how long do I need (or want) to hold the capital in relative stasis? My .02: Short term deflation (less than 1 year) will be followed by period of uncontrolled hyper-inflation. |