Bond investors are now willing to PAY INTEREST to the United States for the privilege of holding our treasury bonds.

Via the fabulous blog of Berkeley’s Brad DeLong, is this observation:

Daily Treasury Real Yield Curve Rates 1

If this isn’t a market prediction of a double-dip and a lost decade (or more), I don’t know what would be. At least Hoover was undertaking interventions in financial markets–and not just blathering about how cutting spending was the way to call the Confidence Fairy…

So, do conservatives believe in markets? Or don’t they? Because the bond market — which the Wall Street Journal has long praised as being omniscient — is saying to us and to Europe:

Wrong turn guys. Go back. Rethink. Don’t do fiscal contraction now. We’re expecting deflation, not inflation. We’ll gladly give you long-term money for free. We’ll pay you interest if you will take it. Please take our money. Please spend like hell. There is no other actor except sovereign governments who can make up the shortfall in aggregate demand. Spend governments. Spend now. Now.

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About Guy N. Texas

Guy N. Texas is the pen name of a lawyer living in Dallas, who is now a liberal. He was once conservative, but this word has so morphed in meaning that he can no longer call himself that in good conscience. Guy has no political aspirations. He speaks only for himself.
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One Response to Bond investors are now willing to PAY INTEREST to the United States for the privilege of holding our treasury bonds.

  1. Pingback: Krugman on the “Utter Wrongness” of the Wall Street Journal’s insistence that we cannot afford stimulus | Notes and Rests Make Music

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