I understand that trader mindset will go ultra-short term, depending on what it is you generally trade... but... this isn't a normal set of circumstances, it won't be a normal recession.
Basically, monetizing of debt has already started on some scale (as i understand it). The Fed is buying into short term treasuries in a big way, in hopes possibly of forcing the banks out of their short-term bolt-hole for cash and into what they should be doing... lending... but that doesn't excuse that the fed is out there buying its own govt's debt.
Maybe i'm misunderstanding that...
Monetization - Wikipedia, the free encyclopedia
Quote:
Debt monetization occurs when a nation's central bank (e.g. the Federal Reserve in the United States) buys government bonds. [1] If a government's expenses exceed its tax revenue, if nothing is done the government will draw resources (capital) out of the private market. Since there is a limited amount of capital available in the market, there will be less available to fund business growth if the government takes out a substantial portion. If the debt is monetized, the capital is thereby returned to the private market.
Debt monetization can be seen as a flat tax because the ultimate result is that the government acquires additional funds and the currency decreases in value. However, monetization helps the government temporarily to meet its short term commitments at the beginning. Debt monetization has the drawback of increasing the twin deficit. That is, when government financing is increased, along with interest rates and foreign capital, the trade deficit also goes up along with the budget deficit.
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"I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}--
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