by AgentR11 » Tue 09 Aug 2011, 02:20:23
Its because the demand is upside down right now; but its hard for the peons to see it.
So, change places in your mind. Behold a wizard has anointed you, and places 100 million in cash, in your name, in Bank X in NY. Its really yours. But, Bob the Banker calls you up in the morning, he's not offering to pay you interest, he wants you to pay him for the privilege of having that cash in his bank. So you go looking, should I buy in to risk, or do I want to preserve; if you're willing to go risk, you have lots of choices, then again, if you'd put it in risk last Wednesday, you'd have already lost 10-15 million of it. So you think, that sucks, so no risk; ok, bank/cash is negative interest + inflation loss; where can I go?
Where?
Treasuries.
ie, It no longer matters a hill of beans what S&P says about the dollar or treasuries.
Its kinda embarrassing to them that they published it, because it will just go to prove that when the size of the nation's market is so large, and so deeply structured on its own currency, external ratings are no longer even relevant; what matters is that Bob has x-odd million dollars, and the only safe-preserve place he can put it is US Treasuries. At least he knows when he puts 10 mil in Treasuries, he'll get 10 mil out when he needs it next week, or next month.
Their world is not like ours where we stick it in the bank, which ever so kindly pats us on the head with a few cents in interest payment.
Yes we are, as we are,
And so shall we remain,
Until the end.