Are T-bonds still really good investments?

[Skidmore]

My question comes from all the debt * is piling up for the nations. If he defaults on the debt, what does it do to T-bonds? Do they become worthless? If not, under what conditions can T-bonds become worthless?

[bryant69]

1. If T-Bills become worthless

Than civilization is basically over (at least in teh United States), and I would be worrying more about getting as many canned goods as possible than about getting paid for your T-Bills.

The economic consequences of the United States Governement defaulting on the debt would be enormous. Even the Republicans know that (which is why they are following their standard strategy of building up the debt and then deciding to tackle it by cutting programs they don't like.

At any rate, I would put the possibility of the Government defaulting on its debts at a very low probability.

Bryant
Check it out --> http://politicalcomment.blogspot.com

[tom_paine]

4. So, what do you think a $15,000,000,000 debt service costs per year?

If ineterest rates, historically low, rise even the tiniest bit in response to monetary pressure?

Because, even in a fully "MacNeil-Lehrer" world where nothing untoward ever occurs that isn't reported on good old Corporate TV Pravda, that is the National Debt we will have in 2012 after the reign of Emperor Jeb or whichever PARTY worthy is selected to be Leader of Amerika in order to maintain a "decent interval" between Rulers Named Bush.

Add to that the impact across the entire financial and services sector that full-swing baby Boomer retirement entails and you have quite an insoluble problem.

Do you think we will continue to have a $2.8bn influx of foriegn monies from the Free World, the Rest of the BushPutinist World and the Third World in 2012?

When, to service THAT debt, we will need about $5,000,000,000/day?

Even if they had it and wanted to continue to appease the Empire, could they afford it, pouring it into an increasingly impoverished, tyrannized "dry well"?

We shall see. Do the math. $15,000,000,000,000 times 5% interest (a number which could easily rise) is a $750,000,000,000/year tab, and it is very possible that the Orwellian denial of the economic community will have begun to fade by then (although it is possible the Orwellian Denial will have deepened, for we are dealing with an unprecedentedly sophisticated Perception Management Program that has the National Treasury and a Corrupted Multi-Billion Dollar Media at it's heart).

In any case, the trends become more fixed every day. As fixed as the demographic "golf-ball in the snake" that is about to grow old, sicken and die. Whose passing collectively will impact our nation as much or more so than their tumultuous youth.

Yes, now in the Early Tiberian Phase of Imperial Amerika, the Empire defaulting on it's debt is at a low probablility.

However, I wonder how many forward-thinking Romans, observing the trends of servility and corruption, postulated the coming horroros of Caligula and Nero?

We will never know.

[bryant69]

6. You are right

We do need to get Congress and the White House back in the hands of Democrats (or, at least, progressives) - it's imperative for both us and our children than this happen.

Bryant

[Socialistdem]

2. nope

well they will never become worthless because the govt can just print more money. If you want to bet against the dollar, your best bet is physical gold or silver, and ebay has plenty of that. Just make sure to buy from a reputable dealer.

[Art_from_Ark]

5. "Just print more money"

Ask Brazil what happens when you do that.

Anyone want some old cruzeiros?

[newportdadde]

3. I doubt you would see them completly worthless..

however if the government tries to print its way out of debt using inflation to make that debt worthless then you could have a problem.

"One possible downside to Treasury bonds is that if interest rates increase during the term of the bond, the money invested will be earning less interest than it could earn elsewhere. Accordingly, the resale value of the bond will decrease as well. Rising inflation can also eat into the interest earned on Treasury bonds. Because there is almost no risk of default by the government, the return on Treasury bonds is relatively low, and a high inflation rate can erase most of the gains by reducing the value of the principal and interest payments."

http://www.investorguide.com/igubondtreasury.html

Now since we have just seen the lowest interest rates in the past 50 years or so all you have to do is ask yourself logically where rates are going to go. Factor into that the cost of higher gas, higher consumer goods(like food) and a dollar loosing value etc and interest rates are going to continued to be pressured to rise.