Thursday, June 17, 2010

Real Yield Infection (Musical Tributes)



Dead.



Dying.



Not dead yet!



I've been predicting the death of real yields since 2004. I felt that the era of making money off of money would be coming to an end, much as it did in the 1970s.

That said, real yields are very low and I am currently deflationary. They could spike up like they did in late 2008. They could also spike up for other reasons. For example, the US could simply offer too much debt and find a lack of demand. If so, I offer an alternative musical tribute for that possible outcome. That's right! Two musical tributes for the price of none! Woohoo!



Source Data:
I-Bond Rates
FRB: Selected Interest Rates

11 comments:

Stagflationary Mark said...

Here's something to think about when looking at the charts above.

Current Rates

I-Bond: 0.2%
5-Year TIPS: 0.33%
7-Year TIPS: 0.74%
10-Year TIPS: 1.22%
20-Year TIPS: 1.65%
30-Year TIPS: 1.73%

getyourselfconnected said...

Surely this is a sign of long term growth, yes?

NOT!

I find myself as confused and bemused as 2007; everything is staring everyone in the face that all is not well and about to get really bad and nobody could give a crap. Just unreal really.

Stagflationary Mark said...

GYSC,

Do NOT drink something with high alcohol content while reading the following then. You are likely to spray it out your nose and feel enormous pain.

Stocks eke out gain after downbeat economic data

"I think we're starting to see a change in psychology," Orlando said. "We're beginning to ignore bad news and focusing on the bigger, better long term picture, and that's encouraging."

The bigger, better long term picture? What the @#$% is he smoking? I want some. Hahaha!

getyourselfconnected said...

I am working on a post right now about clowns like that. At what point DID they ever do anything but ignore bad news? What a joke.

Stagflationary Mark said...

GYSC,

November 29, 2005
HOUSING MARKET UPDATE

GWEN IFILL: Was there ever such a thing as a housing bubble?

DAVID LEREAH: I don't like to use the word "bubble" because bubbles burst.


Hahaha!

GWEN IFILL: Is there an incentive to stay and see what happens next, stay put and see what happens next?

DAVID LEREAH: There's always some fence sitters. If you sit on the fence and do nothing, that's a gamble in itself because if you do nothing and rates continue to go up, you lost because now you're going to have higher monthly payment s with the next loan.


Hahaha!

I've been fence sitting since 2004! Lovin' it!

getyourselfconnected said...

Lereah can sit and spin on a fence post for all I care; that guy should run for president.

Stagflationary Mark said...

We need more Playskool economists. They keep making toys that perfectly describe our long-term economy.

Playskool commercials with Ryan Stiles

Playskool Busy Ball Popper?
Playskool Simon Says Sit & Spin?

Perfect! Hahaha!

getyourselfconnected said...

I stole your stuff again, I mean I linked it tonight! Good material.

Stagflationary Mark said...

GYSC,

Someone once said that imitation is the sincerest form of flattery. They clearly never met a blogger though.

The sincerest form of flattery these days is the mention of an idea with an appropriate link to the source!

Thanks. :)

Anonymous said...

I'd say we are heading for Japan 2.0. Weak growth and de-leveraging for the next 10 years. Plus deflation.

If we can get through one more year without everything exploding then I would be even more sure.

But its a total gut feeling.

I think Gold is going to fall, too. Zerohedge commenters are like those dudes who thought the internet bubble would continue, or houses can never lose value, etc.

When to short though?

I think Mark is in a good position in that he does not need to increase his wealth too much and is retired (right?)

For me, I'd like to grow some more wealth and I am not retired yet. So, I do think about shorting, etc. I didn't even really know you could short stocks back in 2007-2008.

My last investment strategy was non-USD high dividend payers - 7.5% and up rule of thumb. That worked well until I pussied out last month and took my profits. Now i am back to Cash...missing those divvy payments. I will revisit if we get another decent correction.

Coba Coba

Stagflationary Mark said...

Coba Coba,

You are right that I feel no great need to swing for the fences any longer. It is all about safety to me from here on out.

For what it is worth, I plan for a -2% inflation adjusted growth of my nest egg (sort of like a 1970s situation that never ends).

In theory, that would tap me out in my mid 80s but I'd still have a paid off house worth something (in theory).

Anything more than that is just a bonus.