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The yield on Treasury Inflation-Protected Securities due in July 2012 is now negative. This means that investors are willing to take a negative real return in exchange for the (ahem) security of owning dollars.

This means that liquidity has dried up all over the world to such an extent that investors are willing to pay a huge "liquidity premium" (meaning, they can dump their TIPS almost whenever they want) that's greater than the real return of the bond.

Posted by edelfenbein at March 10, 2008 2:17 PM