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:
Retype Email:
Country
Zip Code:
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Quinnipiac Poll: Hillary More Popular Than Gov. Kasich in Ohio

Friday, 01 Aug 2014 18:51 PM

Despite President Barack Obama's abysmal approval rating with Ohio voters, fellow Democrat Hillary Clinton is a more pop . . .

Reports: Cruz Angering GOP Establishment on Way to '16 Run

Friday, 01 Aug 2014 17:55 PM

Sen. Ted Cruz has his eye fixed on the White House, and he plans to undercut the established Republican House leadership . . .

Gallup Poll: Midterms Look Grim for Democrats

Friday, 01 Aug 2014 12:16 PM

Slightly more Americans identify politically as being Democrats than Republicans, but that isn't enough to overcome vote . . .

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