Bailing Hedge Funds Incognito?

[Big Daddy]

I formulated it wrong, government bonds are per definitionem risk free because governments dont default on bonds. The only reason for a bond to not be paid back on time is when the nation ceases to exist.
Please note that this does not include any other instruments of borrowing.You mean a treasury bond?
Don't they just pay them back with US dollars?

What if the dollar is devalued due to hyper-inflation?

[tk939]

For the US this would be treasury bond, yes.
It is always paid back on time. Nobody says anything about the buying power of the dollar after the bond expires, though. That´s where the expected returns come in and the ratings.

[Bernardd]

Boy, I just finished this book "Creature from Jekyll Island", and if history is any teacher, the US is in for a rude awakening.

Based on your recommendation and the few on Amazon, I just purchased the book. Should have it in a few days. Will get back to you with my opinion.... Nothing like a good book discussion.

[Big Daddy]

For the US this would be treasury bond, yes.
It is always paid back on time. Nobody says anything about the buying power of the dollar after the bond expires, though. That´s where the expected returns come in and the ratings.Well, it seems to me that when these come due, people will either roll into a new one or cash out and invest somewhere else.
If the dollar starts to fall, I would think they would want to move the maturing bills into foreign money or other investments.

Wouldn't this mean the Fed would have to redeem the tbill with new money, and cause a greater de-value of the dollar, which would push more away from it into other investments.

The only thing that seems to keep this from happening is the constant influx of new money. It's like the simple pyramid schemes that pop up among people I know. Does anyone still see them around? hahaha

[mikalikat]

Ok, would someone be kind enough to 'splain what exactly a hedge fund really is? I barely got past a savings account.

[Issachar]

A definition with some embedded links ..

http://www.investorwords.com/2296/hedge_fund.html

Issachar

[mikalikat]

That was tremendously helpful, thank you! Not totally comprehended, but it got the point across. I appreciate it.

[tk939]

The bond is paid out at the end of the running time. what the bond holder does with the money then is up to him. While the bond runs there is no possibility to get paid earlier, so you are stuck with the bond if no one else wants to buy it.

BTW the fiat system works for every currency system on the planet so far, since ther is no currency currently fixed toa commodity, so the fiat system leads currently about 150:0

[Issachar]

the fiat system leads currently about 150:0 :lol2

A good line to start out my day! :)

This is exactly why the whole world will go into recession and eventual depression instead of the historical nation here and nation there ..... and the "answer man" will come on the scene and "save" everyone. The whole "world" will bow down and worship him. Sad.

Issachar

[Big Daddy]

The bond is paid out at the end of the running time. what the bond holder does with the money then is up to him. While the bond runs there is no possibility to get paid earlier, so you are stuck with the bond if no one else wants to buy it.

BTW the fiat system works for every currency system on the planet so far, since ther is no currency currently fixed toa commodity, so the fiat system leads currently about 150:0
I guess my understanding is that when these bonds mature, the US Treasury redeems them.
If they do not have the cash on hand to do that , the Fed steps in and prints the money to do so. The Fed actually backs the Treasury and guarantees their redemption. They are the bank of last resort to the US Gov.