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Are TIPS mispriced?

4 pointsby secretasiandanover 14 years ago

1 comment

lzwover 14 years ago
Deflation is not a possibility. The US government is issuing racord levels of debt and running record deficits. This requires monetary inflation to finance, litarally, this is what produces treasuries.<p>Sectors of an economy can go up and down becpsed on a variety of factors, but if they go down and businesses have sales to try and drum up more volume, or lower prices to get marketshare, this is not deflation.<p>Since there are more dollars outstanding today then ever before, and in a couple months time a new record will be made, the value of these dollars will be going down. This is the basic mechanism of inflation.<p>It will not reverse course unless the government makes a massive change, and that change seems impossible.
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