tag:blogger.com,1999:blog-8515247115132134144.post7575189303663495020..comments2024-02-17T12:34:01.400-08:00Comments on Illusion of Prosperity: CPI and EE Savings Bond ThoughtsStagflationary Markhttp://www.blogger.com/profile/04568993350246477976noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-8515247115132134144.post-85698945101422033262011-12-17T14:26:37.819-08:002011-12-17T14:26:37.819-08:00tj and the bear,
What do you suppose the rates we...tj and the bear,<br /><br /><i>What do you suppose the rates were right before the Gold Reserve Act?</i><br /><br />Sliding down into oblivion.<br /><br /><a href="http://www.measuringworth.com/interestrates/" rel="nofollow">MeasuringWorth: What Was the Interest Rate Then?</a><br /><br />I've visited that site more than a few times out of curiosity.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-26742328873539638202011-12-16T20:19:32.984-08:002011-12-16T20:19:32.984-08:00What do you suppose the rates were right before th...What do you suppose the rates were right before the Gold Reserve Act?TJandTheBearhttps://www.blogger.com/profile/10735388072841457108noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-71491923588243806502011-12-16T18:26:15.931-08:002011-12-16T18:26:15.931-08:00Mr Slippery,
It is nice to have the option to cas...Mr Slippery,<br /><br />It is nice to have the option to cash something out without taking a huge loss. That's certainly an appealing factor to me.<br /><br />Hindsight may show that I was a fool for buying EE Bonds and I Bonds, but at least I don't require one of <a href="http://en.wikipedia.org/wiki/Greater_fool_theory" rel="nofollow">these</a>.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-84072890601580815482011-12-16T18:21:15.581-08:002011-12-16T18:21:15.581-08:00Troy,
But to do this they need to get trillions o...Troy,<br /><br /><i>But to do this they need to get trillions of dollars back into the middle class's grubby little hands.</i><br /><br />You'd think that the ruling elite would love trickle up economics.<br /><br />Sarcasm! ;)Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-91891791178533430712011-12-16T16:38:48.985-08:002011-12-16T16:38:48.985-08:00EE bonds may be safer than Treasuries because you ...EE bonds may be safer than Treasuries because you don't have the same interest rate risk. Uncle Sam is always a willing buyer of EE bonds with only an interest penalty, but you can't lose principal. With Treasuries and runaway interest rates, you could lose a lot of principal selling in the secondary market. I still don't like EE bonds much and don't own any, but who knows.Mr Slipperynoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-18082796753223402402011-12-16T14:25:51.431-08:002011-12-16T14:25:51.431-08:00Goddamn but the system needs a big 1970s-sized dos...Goddamn but the system needs a big 1970s-sized dose of wage-price inflation.<br /><br />But to do this they need to get trillions of dollars back into the middle class's grubby little hands.<br /><br />This doesn't seem to be in the cards, LOL.<br /><br />Failing that, what we're looking at is The Decline & Fall of the US Middle Class, I guess.<br /><br />I saw this movie play in Tokyo in the 1990s so I think I know the story.<br /><br />Things shouldn't be this out of whack, but AFAICT the true nature of the problems we face are kept completely out of public discourse.<br /><br />lambs to the slaughter, we is.Troynoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-19860826236681486062011-12-16T13:06:43.136-08:002011-12-16T13:06:43.136-08:00Bonus thought.
This is not investment advice.Bonus thought.<br /><br />This is not investment advice.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-74178696340398897592011-12-16T13:05:55.509-08:002011-12-16T13:05:55.509-08:00This is the current mispricing.
The 20-year treas...This is the current mispricing.<br /><br />The 20-year treasury has a yield of about 2.60%.<br /><br />The EE Savings Bond held 20 years is guaranteed to double. That's a yield of 3.53%.<br /><br />2^(1/20) = 1.0353<br /><br />If EE Savings Bonds were able to be publicly traded, then you could buy one today and instantly resell it for roughly 20% more than you paid for it. (Since they pay roughly 1% more each year for 20 years.)<br /><br />Hindsight may show that EE Savings Bonds were not a bargain (if inflation picks op). However, hindsight will show that they were more of a bargain than 20-year nominal treasuries.<br /><br />It's a relative risk vs. reward situation. Someone is clearly willing to buy 2.6% 20-year nominal treasuries. Only hindsight will show if they were smart to do so. I therefore can't say that buying EE Savings Bonds is smart. All I can say is that it is smarter than at least one alternative.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.com