Jim Rogers opined in an interview. Why? I don't know. If I had to put on a suit and go to the city to rant, I would probably just go for tacos. But anyway. He sang in the "end of bull market in bonds" chorus, and he said the next crash will be worse. Because there is a crash or something every four to six years, and government debt in western industrialized nations is higher than in the last crash. I disagree.I think people are calling an "end of the bull market in bonds" because interest rates are near zero. But... when you have deflation, that deal can still get better. Jim Rogers calls for inflation because of universe-level commodity scarcity, but I take a Julian Simon point of view. Here is how I think Jim Rogers' punt would roll.I think central banks can buy bonds, because the people are capable of consuming less. They will go on food stamps, and stop buying fancy cars, and the rich will get richer, and the poor will get more free time. And the people who own the bonds will get richer, owning cash during deflation, and eat the luxuries the poor would have eaten, while the poor watch television.The government doesn't default, they just print money to hand the luxuries of the middle class to bondholders.

QuoteThe government doesn't default, they just print money to hand the luxuries of the middle class to bondholders.Yes, we all know printing money is good for the bondholders Narayana Kocherlakota made a similar argument that QE was causing deflation couple years ago. Since then, he went completely in the opposite direction. The link between qe, money printing, etc. and bond prices is complex. I never hear people make coherent arguments. It usually goes something like this: The fed printing money is bad. We have not seen inflation show up in the yields because the Fed is creating artificial demand for the bonds buying everything using QE. This should explain why Zimbabwe had hyper-deflation. The central bank printed money creating artificial demand for zimbabwe bonds, making the bondholders incredibly rich. Since there are too many things going on, the bond market is probably the least useful place to look to examine the effects of qe.

My point was just that you can immunize government debt against a crisis with QE, and have as bad a crisis as you want, while also avoiding inflation by reducing middle-class consumption. So Jim Rogers' old-school insinuation that excessive government debt is risky to the lenders may be wrong.You just put people on foodstamps and forever unemployment checks, and reduce the patterns of production to a less labor-intensive mix.

I can't make any sense of this. If the government prints money and pays people to watch tv, then money supply will go up and production will go down. There will be more dollars chasing fewer goods. How does this lead to deflation? If the government borrows money and uses it to pay people to watch tv, then production will go down. If they monetize the debt by printing money and use the new money to pay off the bondholders, then the money bondholders receive will be worth less. How do the bondholders get rich through monetization?

QuoteOriginally posted by: gardener3I can't make any sense of this. If the government prints money and pays people to watch tv, then money supply will go up and production will go down. There will be more dollars chasing fewer goods. How does this lead to deflation? If the government borrows money and uses it to pay people to watch tv, then production will go down. If they monetize the debt by printing money and use the new money to pay off the bondholders, then the money bondholders receive will be worth less. How do the bondholders get rich through monetization?I thought it was obvious. Between explaining it and riding down to the beach or drinking beer or something, I have no impulse for the first option.

QuoteOriginally posted by: farmerQuoteOriginally posted by: gardener3I can't make any sense of this. If the government prints money and pays people to watch tv, then money supply will go up and production will go down. There will be more dollars chasing fewer goods. How does this lead to deflation? If the government borrows money and uses it to pay people to watch tv, then production will go down. If they monetize the debt by printing money and use the new money to pay off the bondholders, then the money bondholders receive will be worth less. How do the bondholders get rich through monetization?I thought it was obvious. Between explaining it and riding down to the beach or drinking beer or something, I have no impulse for the first option.But definitely have the impulse to explain why you dont want to explain