Economists Reveal Massive Market Forces in Bonds Before and After QE

This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/bonds/economists-reveal-massive-market-forces-in-bonds-before-and-after-qe?post=102509&uid=4798 The debate over Market Monetarism and long bond demand continues. The problem is that few economists, including market monetarists, address the issue of massive demand for long government bonds that I have written about more than once on Talkmarkets . Economists are technicians, and it is often difficult to get them to think outside their boxes. But there are a few encouraging signs that economists are at least starting to think about massive bond demand and/or the roll of clearinghouses in the new normal system we face. And with the new LCR requirement for banks for short duration bonds and notes, studies, like one cited at the end of this article, from Gary Gorton and Tyler Muir, are now being done. The study by Gorton and Muir that shows some bond yields declining arises from the need for