Faber: Treasury Prices Will Collapse as Inflation Soars

Tuesday, 30 Mar 2010 10:03 AM

By Dan Weil

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Treasury bond prices will collapse, sending yields up to a range of 10 percent  to 20 percent during the next five to 10 years, as inflation and supply explode, says investment guru Marc Faber.

Treasuries have performed well so far this year, with the 10-year yield dipping to 3.64 percent from 3.85 percent at the end of 2009.

But with the Federal Reserve printing money like it’s going out of style, and the government issuing trillions of dollars in new bonds to fund the mushrooming debt burden, that rally will soon end, said Faber, editor of  "The Gloom, Boom & Doom Report."

"I still think that Treasuries are overpriced," he told CNBC.

Money printing represents a silent way for governments to default on their debt, Faber recently wrote.

When a government openly defaults on its debt, the workout process is reasonably equitable, with generally receiving 30 to 80 cents back on the dollar, he says.

"But if a government decides to default through money printing, the burden of the default isn't shared equally," he wrote.

Holders of that nation’s currency get hit worst, and that’s what will happen to dollar holders, Faber says.

The situation will push inflation-adjusted short-term interest rates below zero, he predicts.

While Faber is bearish on Treasuries, the Fed’s easy monetary policy has made others bullish

“The Fed meeting has boosted expectations that it will ease for a while, which is great for Treasuries,” Satoshi Okumoto of Fukoku Mutual Life Insurance told Bloomberg.

© 2014 Moneynews. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Report: Liberals Bash Hillary, Back Warren in Secret Emails

Thursday, 18 Sep 2014 21:29 PM

Liberal activists are slamming Hillary Clinton in a members-only group on Google, with some calling for Massachusetts Se . . .

Poll: Support for Scottish Independence at 46 Percent

Thursday, 18 Sep 2014 17:50 PM

Support for Scottish independence amounts to 46 percent of the electorate with 54 percent wanting to stay in the United  . . .

Gallup Poll: Voters View of GOP More Positive

Thursday, 18 Sep 2014 16:33 PM

Voters have a more positive view of Republicans since last year, a new survey shows. . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved