I have included a red trend line, not that you'd have any problems seeing the trend. Real yields on I-Bonds died.
Okay, a similar death of 10 Year TIPS was clearly not one of my better calls. I thought we'd be seeing it as savers would be forced to sacrifice for the common good. However, the bond market refused to go quietly it seems. Note the red trend line. Wow. Hands of a brain surgeon, that one.
I guess I should have just stuck with my original theory. We're combining the very best of the deflationary Great Depression (real yields exploded higher) with the very best of the inflationary 1970s (real yields tanked). We've still got relative long-term price stability it seems, at least as it applies to canned goods and toilet paper. Unfortunately, both eras shared the following common theme though.
Very high unemployment!
Source Data:
FRB: Selected Interest Rates
Treasury Direct: I-Bond Rates
Stag,
ReplyDeleteWe're combining the very best of the deflationary Great Depression (real yields exploded higher) with the very best of the inflationary 1970s (real yields tanked).
That theory seems a good as any. Especially now that the black central bank regulating liquid is starting to bubble. :(
Unfortunately, both eras shared the following common theme though.
Very high unemployment!
From 1995 to 2000, we had an era of extreme free market stupidity. From 2000-2004, we had an era of extreme fed/gov't stupidity. From 2004 to 2008, we again had an era of extreme free market stupidity. It sure looks like 2008 marked the beginning of another era of extreme fed/gov't stupidity.
Unfortunately, all these eras share one thing in common.
Extreme Stupidity!
Apparently, our best and brightest are totally CONvinced that stupidity leads to prosperity. Who knew? It's so counter intuitive.
Here's an idea. Lets stop calling periods of history eras and start calling them errors, lol. Our situation is so off the charts ridiculus that even an angry saver like me can't help but laugh.
Make that blogs list. I'm reserving "bogs list" for the economic indicators that describe where we are and where we are headed I think, lol. Sigh.
ReplyDeleteOver here a "bog" is what you chaps call a "bathroom".
ReplyDeletedearieme,
ReplyDeleteOver here a "bog" is what you chaps call a "bathroom".How appropriate!
I see that it originates from "bog-house", which is even more appropriate!
Then there is "bog rush", which is "any rush growing in bogs; saw grass".
It all makes sense now.
There's a "rush" to invest in the "green shoots" growing over the "bog-house" "tank"!
Stag,
ReplyDeleteHow about the death of real growth. I say real growth because it's hard for me to look at the growth but ignore the cost of the growth (debt). Six dollars in new debt per one dollar of new GDP is more than worrisome to me. And since all new debt has to be supported by even more future debt, I don't see how we can slow the system down unless we crash interest rates for an extended period of time. I sure feel Japanese these days.
Here's another sham - the budget deficit. What a joke. The budget deficit doesn't include all spending. Not by a long shot. Little expenses like future social security & medicare costs are excluded. Oh, and there's those little "not quite accomplished" missions in Afganistan and Iraq. Those aren't included either. Too bad the Iraq incident isn't paying for itself as planned.
http://en.wikipedia.org/wiki/United_States_public_debt
There is a significant difference between the reported budget deficit and the change in debt. The key differences are: 1) The Social Security surplus, which reduces the "off-budget" deficit often reported in the media; and 2) Non-budgeted spending, such as for the Iraq and Afghanistan wars.
We've increased our debt $4.3 trillion in the last eight years! That's about equal to our increase in GDP over the same period.
"Non-budgeted spending" is the key to prosperity. Who knew? That is so awesome! Here's an idea. Let's shrink the budget to zero and increase off-budget spending by $10 trillion. What the heck, make it $20 trillion.
The debt monster is out of CONtrol. What can't be paid, won't be paid.