A Follow-Up on the Treasury Bond Post ...

I also wanted to note that Professor Jeremy Siegel (who I tend to agree with quite often) very clearly spelled out the situation regarding Treasuries in this Yahoo Finance column.

Personally, I feel much better about TIPS, despite the supposed long-shot default risk. Again, that's because I believe inflation is both baked into our current system and especially because of our country's current fiscal policies.

It is also interesting to note the idea of a government defaulting on its debt held by foreigners while honoring obligations to its citizens. I don't believe the U.S. would pursue such a self-destructive strategy, but in many ways we are already pursuing a similar -- albeit less overt -- form of this by continuing to flood the market with bonds that must be begrudgingly bought by countries such as China who already hold massive amounts of our debt in their reserves.

It's certainly an uncomfortable Catch-22 ... and how it will play out remains to be seen.