Canada to issue first U.S. dollar bond in more than a decade

[Verrocchio]

Re: Canada to issue first U.S. dollar bond in more than a decade

Who takes out the new loans? Holders of foreign (appreciated) currencies seem like the only likely candidates. As jtabeb puts it:



Verrocchio's post is worth re-reading.


I'm a little confused by that last sentence. Is he saying that yes, the government will allow banks to be adversely affected, or no, there's a way to beat the banks with this. Seems to me that this argument allows for a window of time between the onset of inflation and the enactment of bank-protecting legislation.

That last sentence? Too often iTulip participants lock horns over generalities. These tend to be abstract enough that they are contested on ideological grounds, so they lose relevance to the specific decisions that participants face. This is not a criticism of iTulipers, as I freely acknowledge that I visit these pages because I learn from them. Still, I find it frustrating at times to see promising lines of inquiry derailed.

The simplistic idea repeated in mantra fashion is that the US government will protect banks from the pernicious effects of inflation. In other words, if inflation results in repayment of bank loans with inflated dollars, then the government will issue new currency (NUSDs, or New US Dollars), and require that all loans be repaid with NUSDs.

This point should be conceded as it will probably be true at some point in time, but governments only take such a radical step after the currency has become grossly inflated. Until that point in time, borrowers will benefit, and yes, banks will suffer, from repayment of loans with inflated dollars. While my current indebtedness is less than 10% of my net worth, I am giving serious thought to substantially increasing my debt.

[MulaMan]

Re: Canada to issue first U.S. dollar bond in more than a decade

What do you want a mortgage again?

Ever heard of property taxes? not sure what state you are in but renting just gets cheaper and cheaper.

The closest thing to "owning" a home in America is "renting" - Another tidbit of free wisdom from MulaMan.

[rjwjr]

Re: Canada to issue first U.S. dollar bond in more than a decade

This has been an interesting read for me because, my wife and I just decided to do the opposite. We refi'd at 5.5% about 5 years ago on a 15 year fixed. We've decided to start making additional principal payments so we can be debt free (currently no car payments, no credit card balances, no other loans, only this one mortgage) in about 5 years.

I understand the inflation play of taking-on debt being discussed in this thread, but my wife and I are coming at this from a different perspective. Hopefully, we'll be debt free about the time I'm looking to make a decision about retirement. For us, it's not worth the ancillary risks involved in the debt play being discussed in this thread.

We already have some of our investable assets in gold & silver of various types, some in commodity funds, some in energy funds, and some powder sitting dry in Treasury bond funds, so I feel we are poised for the likely inflation poom as far as preserving purchasing power. Taking on more debt is too risky and counter-intuitive to our place in life, but best of luck to those of you brave souls that attempt it.