Set Uncirculated
Posted in Uncategorized on 12/27/2003 07:59 am by admin
Set Uncirculated
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US $7.50
The bonds are expected to be among the safest investments, which was why they skyrocketed in late 2008, when there was panic in the stock market. In the popular documentary series "The Ascent of Money", Niall Ferguson, a respected economist and historian British returned in history when the bonds went bankrupt before and explained why it happened and the consequences later. He used Argentina as an example. From 1975, the Argentine government had to sell a large number of bonds to raise funds to finance two wars. The public debt became so great that people have lost faith that the government could pay the debt back and nobody no one would buy government bonds, causing bond yields (interest) to be very high. To be able serve the interest payment, the government seemed to keep more money and has caused rampant inflation.
In December 2001, the government has finally failed in their obligations. I remember hearing about the problem of hyperinflation in Argentina and Indonesia years old when it happened but I never really understood what he did. We'll hear the same thing is happening in Zimbabwe. To be honest, it never really bothered before because I thought these kind of thing only happens in third world countries. What I did not know until I saw this documentary was that Argentina was sixth richest country in the world, where every family could afford steak and a bottle wine for dinner when this happened to them.
If it can happen to the planet sixth richest country, would it be unthinkable to happen to richest country in the world? The biggest buyers of government bonds in the United States are the Chinese. The Chinese government has already started showing their concerns about the safety of their investments in the United States. When Timothy Geithner spoke on his trip to China, he was mocked by Chinese students when he said that U.S. assets are safe. Sovereign wealth funds like Temasek Holdings of Singapore has recently been dumping large holdings of U.S. assets in favor of buying more assets in Asia. Since March 2009, bond yields rose and the dollar America has weakened against most major currencies.
The U.S. government plans to borrow another 10 billion dollars over the next 10 years. Can they afford to do so if the bond yields are rising? The Government of the United States are going in the same way that Argentina and print more money than we already know will result in runaway inflation and massive devaluation of the U.S. dollar? Yields bonds have not hit the highs still optimistic and many say it is quite normal for her to ride when the stock market is rallying that investors are simply moving money from bonds to stocks for better return. I hope they're right I hate really see pension funds, which are large bond investors get hurt if history repeats itself.
Christina Bong
http://blog.sli-smsf.com/
Christina is a Trustee and Chief Investment Officer for SLI Superannuation Fund, a Self Managed Super Fund set up in March 2007. In addition to managing the investments for her SMSF, she also actively trades options in the US market for her family owned investment company.