A well-reasoned article that puts this current situation in perspective. All the while that bond prices are falling coupons are still be clipped, something to bear in mind. Also, with bond yields up, the cap rates on other asset classes, especially real estate, are higher--- no one talk about that adjustment.

I agree that this is once in a generation opportunity to raise cheap funds. The buyers will likely put the bonds in their desk drawer and just wait for maturity--which is exactly what the Federal govt needs to happen. I am not sure these bonds would operate as helicopter money---helicopter money is designed to be channelled into short consumption. 100yr bonds would be used for long term cap ex.

I agree that there are lots of scary outcomes. Past crisis, like in 97-98 were easy to handle because the USD #debt load was manageable. Now, the #USD overhang is around $25 T( in 2016)--- about 6 times the size of the #Fed's balance sheet--- and the Fed cannot help should things really come apart. A strong #dollar policy is not in anyone's interest.

Your point is well taken. The 2009 did have some infrastructure expenditures, but there were so few shovel-ready projects. Today, I have not seen any real evidence that the government has a well-documented list of infrastructure projects, just a lot vague ideas.

Gary, I view 'non-inflationary ' growth to be the situation we have now. Nominal growth of 3-4% made up of inflation, less than 2%, and real growth at 2%. The Trump stimulus package is small in relative and absolute terms than that of the Recovery Act of 2009 which was in the $850 billions range. So, I do not see how $700 billions over the next decade in an economy that grows at 4% nominal can have much impact.

To take this argument one step further, I would suggest that the target for central bankers should be nominal growth. Right now, nominal growth is too low--around 3 % made up of equal parts of inflation and real growth. An economy growing at this nominal rate does not pose any threat from runaway inflation and monetary policy should remain where it is. Setting a target of much higher nominal growth, say 5-7% would allow policy to promote growth.

I agree with the premise of this argument.

The negative yields are no passing fad. It is hitting the shores of North America. Yesterday, the Canadian bank, CIBC, issued over $1.25 billion in covered bonds ( collateral Canadian mortgages) which immediately traded a negative rate, demand was overwhelming.