Timing the Collapse: Ron Paul Says Watch the Petrodollar

[Zippyjuan]

I don't think starting taper will have any dramatic impact on interest rates- they are talking about only reducing purchases by $5 billion a month which is less than ten percent of what they currently buy. Treasury can also change the ratio of maturities if they want- issue fewer long term notes and more short term ones (as a borrower though, I would want to lock in currently low rates for as long of a term as I can to keep future interest payments lower). Ending QE will likely take several years.

 

[Feeding the Abscess]

If a collapse occurs, I really don't think there's much you can do about it. Even if you prepare, if catastrophic, systemic failure takes place, no matter how well prepared you think you may be, your standard of living is going to go into the toilet, and fast. In all seriousness, it's probably better not to make focusing on apocalyptic collapse a main priority. Not only will you still be ill prepared for an actual calamity, but you'll have missed investment of business opportunities that require a bit of risk taking to pay off.

 

[enoch150]

I don't think starting taper will have any dramatic impact on interest rates- they are talking about only reducing purchases by $5 billion a month which is less than ten percent of what they currently buy. Treasury can also change the ratio of maturities if they want- issue fewer long term notes and more short term ones (as a borrower though, I would want to lock in currently low rates for as long of a term as I can to keep future interest payments lower). Ending QE will likely take several years.

Obviously borrowers want lower rates for as long as possible, but borrowers don't set rates. Lenders do.

You're right that a slight taper wouldn't have an impact - if the only reduction in purchases was that by the Federal Reserve. But it will signal the beginning of the end of low long term rates, from a lender's perspective, and they will change their behavior accordingly by lending short term almost exclusively until long term rates are normalized at higher levels.

 

[Zippyjuan]

Managing expectations is an important part of what the Fed does- that is why they do things in small steps (usually) and always announce actions well in advance. Investors already expect that the Fed will start to taper eventually and have priced it into their actions. They already started changing their behavior.

 

[devil21]

Managing expectations is an important part of what the Fed does- that is why they do things in small steps (usually) and always announce actions well in advance. Investors already expect that the Fed will start to taper eventually and have priced it into their actions. They already started changing their behavior.

What is this nonsense? If by "announcing" you mean tipping off Goldman and other connected Wall St banks (those "investors"?) to what the Fed is doing then sure. Saying "we may taper....sometime.....maybe" isn't announcing anything in advance to the public. Did they announce when they extended $16T in guarantees to foreign banks? I must have missed that press release since that was only made available through an audit that was mandated by Congress.