Monday, April 18, 2011

A Special Thanks to My Government

April 18, 2011
Government Keeps Losing With TIPS

BOSTON (TheStreet) -- While investors consider hedging against inflation by buying Treasury-issued TIPS bonds, there is a question of whether they are worthwhile for the government itself. It's left billions of dollars on the table by issuing them.

Disclosure: Nearly my entire nest egg sits in TIPS and I-Bonds.

2 comments:

getyourselfconnected said...

Ha! Leave it to the government to find a way to lose cash. Good stuff.

Stagflationary Mark said...

GYSC,

I don't think the government factored in this. It must frustrate them to no end.

1. The government did not claim inflation rose just "0.01%". In fact, over the past 4 months the government has claimed that inflation has been running at a 5.9% seasonally adjusted annual pace (from 219.240 in November to 223.490 in March).

2. "Crazy gas" isn't the sole driver of consumer price inflation. I could point to many things that are not inflating. Housing comes to mind.

And don't even get me started on how many people believe that food and energy are excluded from the consumer price index. That myth never seems to die.

The government can never win the conspiratorial game.

When oil prices are rising shadowstats claims that the CPI is too low.

When oil prices were falling rapidly (from $145+ to $30+) and so were housing prices, shadowstats STILL claimed that the CPI was too low (even though by older measures we were experiencing severe deflation). Explain that one and win a prize.

P.S. If you can explain it then I plan to inflate the prize away. I just don't need that kind of debt monkey on my back. Sorry! ;)