TIPS Yield Goes Negative for First Time

The threat has never been deflation. Yet, that’s what they’ll continue to spin, thus, many will believe. Those that suggest that 2000-present represents a comparison to 1929-1954 ignore the key difference in the U.S. dollar between the two periods. Roosevelt, desiring inflation through currency devaluation, had to confiscate gold as it was directly tied to the dollar. Once gold was confiscated (at $20/oz), it was promptly revalued at $35/oz by executive order.

Check you pockets once. Do you find any $20 gold pieces? Any Federal Reserve notes convertible to gold?

The U.S. dollar has no anchor and can be devalued at will. On going default through inflation is the real threat.

The up turn in the TIPS to nominal long bonds reflects another reacceleration of inflation. It's not the magnitude of the ratio but rather than direction and acceleration that matters to capital.

TIPS to Nominal Bond Ratio:

In its bid to fight deflation, the Federal Reserve seems to be gaining some traction.

On Monday, investors snapped up government securities designed to protect against inflation, generating so much demand that the Treasury was able to sell them with a negative yield, the first time that has happened.

Source: online.wsj.com