Trading Update

Sold the platinum eagles I bought at $1083.74 on 8/24/21 for $904.34 ($40 over spot) today. Fairly hefty loss, with nearly half of it coming from transaction fees (counting both the buying and the selling). In hindsight, not ideal. It was a very small position, but painful just the same.

I intended to hold for many years, but what a difference a year makes. When I bought, the 10-year TIPS yielded -1.01%. Today, it yields +1.39%. I must admit that I never saw that coming. It's a game changer, at least temporarily, if nothing else.

That's not the main reason why I sold though. I needed to sell something in order to pay ongoing expenses. My choices were TIPS outside my retirement account, I-Bonds, EE-Bonds, and these coins.

I don't want to sell anything that would push up my income this year, because I still qualify for the health insurance subsidy of the Affordable Care Act. I also don't want to sell things that are generating inflationary gains with inflation running so hot.

So, as much as it pains me, the coins had to go (and some I-Bonds too, soon). At least I can put the capital loss to very good taxation use thanks to my other investments tied directly to inflation.

Not the first difficult selling choice I've had to make. Won't be the last. TIPS generate plenty of inflationary gains but not all that much current income, savings bonds generate no income until cashed out, but the ongoing expenses continue to mostly come at night, mostly.

Trading Update

Bought all the tax-deferred savings bonds for the year that the government would allow. Didn't see any reason to wait.

1. 0.1% EE Savings Bonds.

Clearly not buying these for the 0.1% interest rate. If and only if they are held 20 years, then they are guaranteed to double though. That works out to 3.53% per year. That's much higher than the 1.6% yield on the 20-year Treasury bond.

2. 0.0% I Savings Bonds.

Clearly not buying these for the 0.0% interest rate. They do appreciate based on the consumer price index though. The 0.0% fixed rate is higher than the -0.29% fixed rate on the 30-year inflation protected Treasury bond (TIPS).

This has nothing to do with today's stock market action, or even the pandemic. I've been buying savings bonds off and on since 2000, and as long as they offer good relative safety and value then I will no doubt continue to do so.

For those curious about my long-term purchase of VPU (and/or enjoy watching paint dry or water boil), I intend to post a chart on (or shortly after) the last trading day of each month. That will allow you to laugh at my risk taking folly and/or watch it slowly grow with me well into the distant future. :)

Jim Cramer Mystifies the Roth IRA Mystery

July 15, 2016
Cramer: To Roth or not to Roth? Untangling the IRA, 401(k) Roth mystery

"The less you make, the more likely it is that a Roth is for you. It's that simple." -Jim Cramer

Simple decision!

When deciding among a Roth IRA, 401(k) or a traditional account, it depends if it makes more sense to pay income tax now or to wait and pay income tax after retirement. This is a complicated decision that has more to do with the specifics of a situation and whether one anticipates they will be in a higher tax bracket at retirement.

Complicated decision!

"For anyone whose marginal tax rate is 25 percent or less, which is most of America, I think you go with a Roth. Better to take the hit up front, then allow your Roth IRA to compound tax free for the rest of your life," Cramer said.

Simple decision!

There's no math to support that simple decision, of course. The complicated decision was simply swept under the rug. You just have his word on it, and apparently it works for everyone in the 25% tax bracket or lower.

Why is it better for a lower income worker to lock in the 25% tax rate? Beats me! I'm retired. When I was working, I was generally in the 28% tax bracket. Thanks to low inflation, low interest rates, and no job, I'm now solidly in the 15% tax bracket. Glad I didn't lock in 28%!

And then there's this silly emotional inference that the Roth IRA is superior because it compounds tax free. If you prepay 25% in taxes or pay 25% when you withdraw, it's all the same. The difference between a traditional IRA and a Roth IRA can be seen in the following formulas with $1000, a 25% tax rate, 6% growth, and 30 years.

(75% x $1000) x 1.06^30 = $4,307.62
($1000 x 1.06^30) x 75% = $4,307.62

There is no difference between taking it out in the beginning or taking it out at the end. None. There will be a difference if the tax rate changes though. That's why it is a complicated decision. One needs to know what will happen to the tax rate in order to decide which IRA to use.

I'm in the camp which believes that the tax rate will likely be lower in retirement for most people, especially for poorer people, just like mine is. I no longer have a job that pays me a salary. Lower income, lower tax rate.

That doesn't mean all my taxes are lower though. The government finds other ways to tax me. Sales tax rates only seem to go up. It's all the way up to 9.5% in King County, WA. Ouch. Property taxes are climbing substantially again too, because we all apparently love inflating the bejesus out of housing prices. The Roth IRA does not protect against either of those. And don't even get me started if the US someday adopts a value-added tax (VAT). Roth IRA investors could easily become the tax bagholders. Prepay the income taxes and then pay the consumption taxes later? Ouch. Could happen.

The decision to invest in a Roth IRA is not a simple one, no matter what Cramer says. It just isn't.

One thing is nearly certain though. If you are in retirement, and have prepaid the taxes on all your investments, then you probably won't be paying much in income tax. Without income to be taxed, how will you be in a high tax bracket? Just something to think about, not that Cramer thinks you should think. Simple decision. Right?

I do not mean to imply that I have replaced Cramer's simple decision with a simple decision to do the opposite. For example, if inflation picks up and stays extremely elevated, my inflation-protected treasury investments, held outside my retirement account, would likely push me into a much higher tax bracket. So far, so good. Unfortunately, past performance is not necessarily indicative of future results. Sigh.

This is definitely not simple investment advice. At best, it's complicated opinions on a complicated topic. Want some real advice? Your lifetime individual retirement account decisions are not a Mad Money lightning round! Take some time to think them through.

Who to Really Thank for Today's Stock Market Rally

I would never ask for myself, but I do think my fellow bearish bond anti-vigilantes deserve a round of applause. In the past week, the 30-year treasury yield has fallen from 2.50% to 2.27%. The yield held its ground today, in spite of the rising interest rate environment we find ourselves in, and in spite of the stock market rocketing higher. That's an amazing amount of spite and support for our fragile financial system. We're there for you. We've got your backs.

Not only will we continue to support future stock market valuations, but we also pledge to continue ruthlessly attacking the evil New York bank net interest margins on your behalf (as seen in the chart below), just as we ruthlessly attack the future returns of this country's many underfunded pension funds. It's all for you. Enjoy this era of permanent modern prosperity! Please don't let it go to waste!


Click to enlarge.

February 17, 2016
The Telegraph: Negative interest rates a 'dangerous experiment' for the world as monetary policy hits buffers

Commercial banks are at particular risk from negative rates, which have been described as a tax on the banking system.

Sub-zero rates reduce the profit made on interest, while increasing the cost of capital for borrowers. Japan's banking sector has seen its net interest margin (NIM) fall to 25-year lows as a result of the Bank of Japan's unprecedented monetary stimulus, according to data from Morgan Stanley.

Sometimes, in order to save a thing too big to fail, one must first nearly destroy a thing too big to fail.

Source Data:
St. Louis Fed: Net Interest Margin for Banks in New York

The Banking System: Don't Be a Hero

June 19, 2016
USA Today: What to do if you’re in a bank robbery

1. STAY CALM
2. OBSERVE THE ROBBER, IF YOU CAN
3. DON’T BE A HERO
4. BE COOPERATIVE, UNLESS …
5. DON’T COMPARE NOTES WITH OTHER WITNESSES
6. CONTINUE TO BANK CONFIDENTLY

1. Stay calm as you sell all of your banking stocks at the early stages of the financial crisis. Always better to calmly sell early, than sell late in a blind panic.
2. Observe the bank CEOs, if you can. In times of trouble, they can be elusive. Do not lose hope. For those who are patient, simply wait for them to testify before Congress. Watch them squirm for taxpayer bailouts.
3. Don't be a hero. Don't deposit more money in the weaker institutions until the crisis has passed. You'll know when the crisis has passed. Interest rates will be normalized to what they were just before the legendary dotcom crash, because nothing is more normal than that.
4. Cooperate. As they say, don't fight the Fed, unless fighting the Fed involves buying long-term treasuries before the Fed does. If that's the case, fight the Fed with every fiber of your being. Don't let the Fed win! Gobble them up faster than they can! And should you ever "need" to sell instead of simply holding to maturity as I intend, then be prepared to potentially fight the Fed again. Sell before they do or you might regret it, unless, of course, the Fed intends to hold to maturity too, like they've been doing.
5. Don't compare notes with other witnesses. The last thing this country needs is a bunch of naysayers continually pointing out the weak financials. Whatever you do, don't start an Illusion of Prosperity blog. Oops.
6. Continue to bank confidently. 25-sigma events are relatively rare. The odds of two of them happening in one lifetime are probably less than 50%, unless something unexpected happens. You know, like the sudden appearance of a flock of black swans flapping to the beat of the Candy Mountain song.

Is an Investment Tax Good for Investors?

Two Treasury Bond Scenarios

1. The government can buy its own Treasury bonds until rates fall by 1%.
2. The government can impose an annual 1% tax on Treasury bonds so the effective yield falls by 1%.

To newer Treasury investors, both scenarios feel the same. 1% of the yield has vanished.

It doesn't end there though.

Two Stock Market Scenarios

1. These newer Treasury investors can buy stocks instead, just like the Fed had hoped, pushing dividend yields lower.
2. The government can impose an annual tax on stocks so the effective dividend yield falls by that same amount.

To the newest stock market investors, those investing today, both scenarios feel the same. Some of the dividend yield has vanished.

Today's newest bond and stock market investors, who did not participate until now and therefore did not receive any price appreciation due to the Fed actions, are now basically experiencing a seemingly permanent tax on their investments. Both bond yields and dividend yields are lower just like they'd be if they were taxed.

I am not a newest investor. I locked in rates before they fell. Bond prices have gone up. So let's talk about how much better off I will be because of the Fed's actions.

Not one bit better, just not significantly worse. How can this be you ask? My bonds have gone up in price! Surely I must be better off! Surely I can spend more money frivolously!

Nope. Can't spend even a penny more.

The bonds I purchased pay the same interest they did when I bought them. There is no bonus interest. I planned to hold to maturity. I still do. At maturity, there will also be no bonus price appreciation. I'll get exactly what I was expecting when I bought them in the first place. The temporary price appreciation they have now will not help me, even by so much as a penny. Nothing the Fed has done has added to the prosperity of my long-term Treasury bonds.

It gets worse though. As my bonds mature, I immediately become a newest investor and I will see an investment world where both bonds and stocks are experiencing the equivalent of extra taxation.

So how on earth is this "taxation" supposed to make me more prosperous over the long-term? I have a simple answer.

It isn't prosperous. It's preposterous!

Feasting on Our Prosperity

The optimists look at the markets and see wonderful things. Housing prices are rising. Stock prices are rising. Bond prices are rising. What's not to like? Everyone wins.

This is what I see.

December 16, 2015
The Fed's rate hike...in 2 minutes

5. Savers will finally make a little money: If you put money in your savings account, you will slowly start to earn interest over the next couple years as rates start climbing higher. Savers haven't earned any interest since 2008.

On that day, the 30-year inflation protected treasury bond yielded 1.34%. Today it yields just 0.78%. In the eyes of the bond market, there will be no future harvest for savers. The seed corn is continually being eaten.

We can prove this is true for treasury bonds. After taxes, a 30-year TIPS will not provide much real growth going forward, if any. We can't prove if it is true of housing and stocks. However, when there is a fat man gorging on steak at your dinner table, one might assume that he's also planning to gorge on the mashed potatoes and cheesecake, if he hasn't already.

So what do you do? You've got a choice. You can take the moral high ground and hope there will be some cheesecake left for you, or you can try to eat a bit faster.

The fat man has the advantage though. While he's gorging on cheesecake, he'll be telling you how to cheesecake-cost-average into the dessert. You know, take small bites every few minutes just in case better cheesecake magically appears.

When I see a bargain I never dollar-cost-average. I don't say to myself, "Hey, Coca-Cola is on sale. 4 12-packs for $11! Perhaps I should dollar-cost-average instead of backing up the truck." So why should I do it with my investments? Perhaps if I don't trust an investment to meet my needs or trust that an investment actually is a bargain, then I shouldn't be buying that investment in the first place. Just a theory.

The TIPS and I-Bonds I purchased in the past will more than likely meet my modest needs. That's good enough for me. Those who "need" 8% returns from real estate and/or stocks from here will more than likely be sadly disappointed. The fat man's been gorging on the seed corn. In other words, it's getting harder and harder to make easy money off of easy money.

This has definitely not been an environment that has rewarded procrastination. If you've been sitting on the sidelines for 7 years, watching your seed corn being eaten, then you're kind of out of luck now. Much of it is gone. Sorry about that. :(

This is not investment advice.

The 8% Return Assumption Will Not Die

June 7, 2016
Bloomberg: A Simple Recipe for the 50-Year Investor

A portfolio allocated 50 percent to the S&P 500 and 50 percent to five-year U.S. treasury notes has returned 8 percent annually since 1926 (including dividends).

The 5-year Treasury currently yields 1.22%. Should that continue, stocks would have to earn 14.78% per year to make up the difference. At these lofty valuations, good luck on that.

(I concede that neither U.S. stocks nor bonds are priced to provide that kind of return today, but I think the long term average is a useful gauge for what’s likely to happen over multi-decade periods.)

Classic denial. More interested in the rear-view mirror than the view out the front window. Concedes that stocks and bonds aren't priced for 8% returns, yet has faith that we can still count on 8% returns over the long run. That historical mirror is just so enticing.

The 30-year Treasury currently yields 2.53%. If you buy today, you know exactly what you will be getting over the next 30 years. There is no room for debate. The bond market doesn't care about what once was. It cares about what is and what will be. In order to hit the 8% target with an equal mix of stocks and bonds, stocks would need to return 13.47%. Once again, good luck on that.

Further, bond yields have been falling for nearly 40 years. To ignore that fact and instead use data going all the way back to 1926 can best be described as wishful thinking. Ask the Japanese about bond yields after their massive housing bust. They'll tell you. It isn't pretty.

As more and more money is deposited in banks, that money has an increasingly difficult time generating real returns. This isn't rocket science.

October 8, 2015
WSJ: Big Banks to America’s Firms: We Don’t Want Your Cash

The developments underscore a deepening conflict over cash. Many businesses have large sums on hand and opportunities to profitably invest it appear scarce. But banks don’t want certain kinds of cash either, judging it costly to keep, and some are imposing fees after jawboning customers to move it.

8% returns over the long-term? I am incredibly skeptical. Inflation could someday do it I suppose, but we won't like the results. Few investors look back at the 1970s and think it was an investor paradise.

Want scary?

April 6, 2000
Risk and Risk Control in an Era of Confidence (or is it Greed?)

All of these statistics leave me apprehensive. Why? Because the future is not only unknown but unknowable. Yet with the acceptance of Modern Portfolio Theory; the ease of massaging data with the computer; and our existence (at least in the U.S.) in today's era the of remarkable political stability combined with powerful economic growth, investors seem to have developed growing confidence that they can forecast future returns in the stock market. If you fall into that category, I send you this categorical warning: The stocky market is not an actuarial table.

To which I add: When everyone assumes, at least implicitly, that the market is an actuarial table, that the past is inevitably prologue, and that common stocks, held over an extended period, will always produce higher returns than bonds and at lower risk then stocks inevitably will be priced to reflect that certainty. At that point, however, the certainty becomes that stocks will produce lower future returns, and at higher risk at that. It is impossible to escape the suspicion that such an actuarial mindset, if you will, is extraordinarily prevalent today among investment advisers, consultants, and economists and, for that matter, the individual and institutional investors themselves. Forewarned is forearmed.

SPY, adjusted for splits and dividends, has returned an average of 4.1% per year since April 6, 2000. There is no telling what it will return over the next 16 years. Seriously.

I do have a fairly good grasp what the I-Bonds I purchased in April of 2000 will do though. 3.4% over inflation, every year, like clockwork. They mature in 2030, 14 years from now. No rear-view mirror needed. Barring an apocalypse default scenario, they pay what they pay. Every month they hit a new record high, not that you will ever read a headline saying that. Unlike the stock market, they can never fall in value. Go figure.

Chicago: Good News, Bad News, and Mixed News

First, the bad news:

May 30, 2016
Chicago Tribune: Memorial Day weekend violence adds to a violent May in Chicago

By Monday afternoon, the tally of those shot in Chicago this year was at least 1,492, according to data compiled by the Tribune, with at least 250 killed. By this time last year, 957 had been shot, with 164 killed.

Now, the good news:

Out of the 7.4 billion people on this planet, only 2.7 million live in Chicago. That's only 0.036%.

Hey, I just work with what I've got. I'm not a good news miracle worker.

And lastly, the mixed news:

March 25, 2016
Chicago Tribune: Chicago area sees greatest population loss of any major U.S. city, region in 2015

The potential fallout is both political and financial. Federal and state government dollars are often distributed to local government agencies based on population; so the population loss creates long-term budget concerns. Communities pouring millions into new roads and schools, for example, based on rosy projections of future growth are left with fewer taxpayers to cover the cost.

I know what you must be thinking. This looks like awful news. How can it possibly be considered mixed? Well, those who left really dodged a bullet!



Bad Mark. Bad. Bad. Sigh.

Sincere apologies to those who live in the Chicago area. :(

Politician's Wet Dream: $3.84 Tax per Gallon

May 25, 2016
Philadelphia Council President: ‘Divisive’ 3-cents soda tax isn’t happening

“This has been one of the most divisive proposals since I’ve been here,” Clarke said during a budget hearing Wednesday, adding: “Everybody on this side of the table knows it’s not going to be a three-cents-per-ounce-tax.”

Seemed like the perfect tax. A slam dunk! Not sure what went wrong. Oh, well. Back to the drawing board.

Hey, maybe they can try this same tax on gasoline. It's sure to be very popular with the commuters! Just need to tell them that it will be good for the climate. You know, less heat, more rain!

The Hole Retail Story

May 18, 2016
Yahoo Finance: The whole retail story in 2 earnings announcements

The divergent quarterly results of Lowe’s (LOW) and Target (TGT) on Wednesday confirm a trend in consumer spending: Americans are spending less on apparel while spending lots in home-related categories.

Are people still shopping at grocery stores? Buying cars? Filling their prescriptions? Eating at restaurants? Buying gasoline? Furniture? Electronics? Sporting goods? Shopping online? How's Eddie Lampert at Sears holding up? Are there any Memorial Day sales this year? Are we going to have a great Christmas? How about next year? Have robots replaced all the retail employees yet? Is Walmart still hiring older workers to greet shoppers and make sure nobody is leaving the stores without paying? How about the bathroom situation? Have we finally figured out who can use which ones? Has Cramer chimed in yet? Is Ackman still shorting Herbalife? When can I expect sales taxes to go up again? Why don't they ever seem to fall? Are Canadians still coming down to buy stuff or is our dollar too strong? Would now be a good time to buy stuff in Canada? How about Apple? The gaming industry? People still downloading apps? Any good ones I don't know about?

Oops. That's one helluva paragraph. Sorry about that. Unfortunately, I have many more questions to ask. I don't know. Seems like I'm missing part of the whole retail story, but maybe that's just me.

So help me, if I get to the last page of this whole book and find out the butler did it, this story's gonna suck.

Dammit. That was supposed to be the end of my post but... Are people still buying physical books? Or are they all electronic now? What's the current Emergency Room Bill to College Textbook price ratio? Why do those two seem so linked? Coincidence? How can textbooks be so expensive when most books with text are so cheap? Where has Borders gone? Is Barnes & Noble next? What will replace them? Will our strip malls shrink? How about nail salons? Can there ever be too many?

Gasping for breath! I need to know!! Are...

To Be Continued

China Is a Victim

January 12, 2016
Jim Rogers Says China Is a Victim, Not Cause of Problems

Yes, the victim. We used our vast military might to force China to make goods for us in exchange for useless paper dollars, completely against their will. Then, we sent over our "Hot Commodities" billionaire to convince them how wonderful both they are and commodities, in general. Next, we crashed that commodity bubble single-handedly thereby forcing them back into US dollars. And finally, knowing with 100% certainty that cash was trash, we started talking about the wonders of commodities yet again.

Poor China. Apparently, promised the world by a foreign power, and believed in every story we sent them with great naivety. We are clearly the masters of deceit, to trick a country that's been around pretty much since the invention of dirt.

May 12, 2016
China's commodities meltdown could rock the markets

One truly astonishing feature of this bout of speculation is that the average holding period of a commodity futures contract was just three hours in April, according to a Bloomberg article. That makes other speculative trading episodes look like long-term investing.

Even if one is wrongly imprisoned, a victim of our system so to speak, then this still might not be the best time to bend over and reach for that bar of soap. We have a long history of #%^*ing China up the asset classes, or so I'm told.

Just a few questions. How on earth did we ever convince them to send us so many actual goods for cash that we can easily print? Is it because they were desperate for our jobs? Why won't they spend their dollars on our goods and services instead of hoarding them? What are they waiting for? Yet another commodity meltdown and a new entry point for even more speculation?

My heart goes out to the victims of the ELEMENTS Rogers International Commodity ETN, down roughly 50% since its inception just before the Great Recession. Half the soap is gone. But don't you worry, Jim Rogers is teaching his daughters Chinese. You should too. When a billion Chinese victims apply for your soon-to-be-automated job, you don't want to be left behind.

In all seriousness, can't we all just get along? There is no reason that we can't all be victims, together. Let us look forward to the day that all factories are automated, all Amazon fulfillment centers are automated, automated drones deliver all the goods directly to our homes, and all profits and wages go directly to the top 1 percent. It's utopia, assuming we cut the taxes of the richest to somehow magically pay for all of it, or at the very least simply borrow the money ad infinitum. What could possibly go wrong?

Two Out of Three Wrong Ain't Bad

June 6, 1985
Ronald Reagan: Remarks at Northside High School in Atlanta, Georgia

Just yesterday we got an announcement that government short-term bonds—the interest rates for the first time since 1978 have dropped below 7 percent.

Hurray! The 3-month treasury bill now yields just 0.25%.

You'll be better situated to pay for college.

Still working on that part. It's coming any moment now. Just need to pay off the $1.4 trillion in student loans first.

We're going to close the unproductive tax loopholes that have allowed some of the truly wealthy to avoid paying their fair share.

Still working on that part too. Our latest plan to make it happen involves attempting to elect an egocentric and narcissistic billionaire associated with the casino industry to heavily tax billionaires such as himself. Cunning plan. When all else fails, put the fox in charge of the fox house. Genius!

In hindsight, two out of three wrong ain't bad.

Quote of the Month

April 26, 2016
Jack Bogle: There's no stock picker's market

"We investors are funny people," he said. "We'd rather have a five percent return at eight percent inflation, than a two percent return with no inflation, although obviously the latter is the better investment."

I've seen it first hand, many years ago, on Yahoo's message board for TIP (an inflation protected bond fund holding TIPS).

I argued that TIP investors should not be rooting for more inflation even though they own inflation adjusted bonds.

It would be far better to earn 1% with 0% inflation than 11% with 10% inflation, due to the taxation of the inflationary gains. And unless you like the thought of being taxed to death, you really don't want to see hyperinflation while sitting in inflation protected treasuries.

My argument fell mostly on deaf ears. One person was especially giddy over the thought of hypothetical 11% pretax returns and nothing I said could convince him otherwise. In the end we managed to agree on something. Each of us thought the other was nuts, lol. Sigh.

As I've said before, I own treasuries with inflation protection for the same reason I have fire insurance for my home. I sleep better. It does not mean that I am rooting for inflation. It does not mean that I'm rooting for my house to burn. Go figure.

Quote of the Day

July 28, 2015
How much money you need to save each day to become a millionaire by age 65

The chart assumes you're starting with zero dollars invested. It also assumes a 12% annual return.

It also doesn't concern itself with taxation, unicorns that will appear in the magical garden that you've created for yourself, the impact of monkeys flying out of your bottom, or the melt time of snowballs in hell. Other than that, the assumptions all seem fairly sound though.

In my experience, the person who starts with zero dollars has no problem at all generating 12% annual returns. Heck, that first penny provides infinite growth, and that next penny doubles the money from there.

Don't forget the most important rule of all. Once you have two pennies you can evenly diversify your investments into both stocks and bonds. One penny each! With the 30-year treasury currently yielding 2.86%, you'll probably need to focus on stocks that yield just 21.14% to hit your 12% target overall.

Easy peasy.

Say, was this article written before the recent stock market turmoil? Just curious.

The Sarcasm Report v.249

October 21, 2015
Money and millennials group behind I-122

SEATTLE -- With exactly two weeks until ballots are due, millennials are targeting millennials in an effort to get out the vote in favor of I-122, nicknamed the "honest elections" initiative.

Honest elections initiative? Awesome! What could possibly go wrong with a nickname like that?

...create a new system in which registered voters can receive up to $100 of so-called "democracy vouchers" to support the candidate of their choice.

Paid for with even higher property taxes! Woohoo! Seriously.

Psst. Hey, buddy. Give you twenty bucks for your "honest elections" hundred dollar voucher. And that goes for any other hundred dollar vouchers you manage to find too. Honest.

Oh, Mark. That's just you being cynical. Get with the program and embrace the honesty inherent in the "honest elections" system!

Can we expect double the political robocalls if the initiative passes? First, they will want to remind us  to spend the vouchers on their campaign. Once that is done, we will be reminded again to vote. That sounds f%^king fantastic!

I'm really going to regret not living inside the Seattle city limits if this one passes! If there is one thing I love most, it is being continually hounded by politicians and their rabid followers looking for money and votes! And politicians looking for "free money" democracy vouchers will no doubt bring out the very best in people! I have no doubt about that!!

This concludes today's sarcasm report. It's extra heavy on the sarcasm with hints of unintended corruption consequences. Yum!

Savings Bond News

This is just a reminder that the rates and terms may change on November 1st for EE Savings Bonds. (The rates and terms have the potential to change every six months for newly issued bonds.)

While others scramble to partake of the "massive" interest that short-term treasury bills may soon offer in a perfect world, I am preparing to make yet another purchase of EE Savings Bonds before the November 1st deadline.

On the one hand, the 0.3% rate currently offered is something that I do not really wish to lock in for the long-term.

On the other hand, a bond that is guaranteed to double in price in 20 years is equivalent to earning a 3.53% annual yield, which is a full percent higher than what the comparable 20-year treasury is currently yielding. Further, since EE Savings Bonds are tax deferred, buying them lowers my current income and therefore gives me a slightly larger subsidy on my government sponsored health care insurance.

This is not professional investment advice. We know this because in all the time I've owned Savings Bonds (since 2000), I can't ever recall hearing about them on CNBC. It's almost like Wall Street can't make any money off of me if I buy bonds directly from the government. Go figure.

So, here we go again. This is not my first EE Savings Bond rodeo. I've bought them in the past and held my nose when I did it. I'm holding my nose a lot less on those past purchases these days. Thanks ZIRP and tame inflation for not giving me any buyer's remorse so far!

In related news, I may buy I-Bonds as well. I'm going to wait until November 1st though, on the off chance the long-term fixed rate moves higher than the current 0.0%. I see little reason to lock in the absolute floor as long as there is a is a glimmer of hope. Realistically, the glimmer is extremely tiny though. I'd say there is a very high probability that the rate will stay 0.0% on November 1st. But we can all hope, right? That's especially true when holding out hope can't actually hurt me, as in this case.

EE Savings Bonds may or may not offer a good value right now, but I can say this with absolute conviction. They offer tremendous value relative to the 20-year treasury, and these days I'll take what I can get. Sigh.

Everything you need to know about Savings Bonds can be found at TreasuryDirect. It has been well worth my time to learn. Might be worth yours as well. No promises though. The future, as always, is hard to predict.

The Religion Known as Economics

September 20, 2015
Could negative rates be next on the Fed's policy menu?

"Maybe we should have done three times as much QE, but nobody knows what three times QE would have done. By contrast, negative interest rates is right there in standard theory," Kimball said, which means that we can predict its effects by using basic economic models and beliefs.

Praise be! Believe it!!

Right now, when a $100 bill is deposited into an account, $100 is added to that account. However, a central bank could create a situation whereby that $100 deposit only led to a $98 increase in the account.

There won't be ANY unintended consequences from that, let me assure you! People will be filled with optimism and good cheer! Consumer spending will increase dramatically with this new "tax" on savings! Believe it!!

Or not.

March 2, 2015
Bill Gross sees negative rates turning investors into Oliver Twist

“Pension funds and insurance companies are perhaps the most important examples of financial sectors that are threatened by low to negative interest rates. Both sectors have always attempted to immunize their long term liabilities (retirement, health, morbidity) by investing at a similar duration with an attractive yield. Now that negative and in almost all cases low short term rates are expected to persist, long term bonds and similar duration assets do not offer the ability to pay claims 5, 10, 30 years into the future.”

It is a similar story for households, which struggle to save enough money at a high enough rate to pay for education, health care and retirement, he says. “Negative/zero-bound interest rates may exacerbate, instead of stimulate low growth rates in all of these instances, by raising savings and deferring consumption.”

I believe that rational people decrease spending when confronted with reduced earnings on savings. That's certainly what I did when real interest rates fell. I'd like to think that I'm somewhat rational anyway, when I adjust my spending to adapt to the new reality. As a long-term saver and retiree, I don't wish to outlive my nest egg. Go figure.

Know what? It's probably just the crazy talk of a standard economic theory heretic. Never mind. Pretend I didn't say a word. Embrace the future prosperity.

The Biggest Risk Facing US Taxpayers

August 26, 2015
Holmes sentenced to life plus 3,318 years for Colorado theater massacre (+video)

Assuming he lives another 60 years, he never becomes eligible for parole, he has just $10,000 in student loan debt now, and the interest rate is locked in at 5%, then he will owe $3.8 x 10⁷⁵ upon his release (in 3,378 years).

That's far more dollars than the number of milligrams of mass in the known observable universe (estimated to be 3 x 10⁵⁸).

Is it just me, or are we going to need yet another bank bailout of epic proportions at some point in the future? Has he set into motion the method of our country's demise?

Exponential growth, whatcha gonna do? *shrug shoulders*

If You Listen to Glenn Beck Religiously, Then Please Heed His Advice!

August 13, 2015
Glenn Beck lists 15 cities “to avoid like the plague”: Seattle is No. 3

As one who lives in the Seattle area, I could not agree more! You cannot be happy here!!

The former Fox News pundit Glenn Beck, a native of Washington, has ranked Seattle as No. 3 on a list of what he calls “15 cities to avoid like the plague when things go bad,” a list based on cities’ lack of religious observance.

“These are cities to avoid like the plague and if you look at that list, these are the cities that are already having trouble and we haven’t even hit the road bump,” Beck said Tuesday on his radio program.”

People living in Seattle are generally open-minded, laid-back, and friendly. There's ample seafood. We have mountain ranges, clean air, and awe-inspiring state and national parks. We care about our environment. There's no state income tax. The unemployment rate is far below the national average. It's also a well-educated city with plenty of creativity. We have many tech companies positioning themselves for the future. Both Amazon.com and Starbucks are headquartered here. Perhaps you have heard of them? Our murder rate is considered low for a city of our size.

We also have excellent modern hospitals based on actual science. Even our pets have access to excellent health care, much to the surprise of those who think they are simply expendable toys, perhaps since they lack human souls and are therefore not part of the chosen master species. Pretty shocking. Right?

We are already having trouble though. Our growth rate may be too high. It seems that many people, perhaps way too many, wish to share our fantastic standard of living and our lack of religious shackles. Oh, the humanity!

If you are the kind of person who religiously listens to Glenn Beck, then I implore you to do us all a favor and avoid us like the plague! Please! I'm begging you! God would not want you living in the sin that we do!!

I'm so worked up over the crappy city that I once lived in and still live near, that I'm going to storm out of my house, cross the street, climb down the gorgeous 200' of vertical hiking trail filled with trees and ferns, cross the road at the bottom, walk another 100' or so, and wade out into the same tiny river that is known for its salmon runs. It's a tough life here in the Pacific Northwest. I try to deal with it as best I can.

Seriously. I've walked down to that river at least three times in the past week. It is a great hardship. I'm especially annoyed by the patch of wild blackberries that I find along the way. No matter how hard I try, I cannot seem to resist the deliciously sinful free snacks. I am a slave to them, and that is just no way to live.

Seattle area! Sinful!! Stay away!!! This is your last warning!!!!

Glenn Beck? Are you out there? Somebody needs a hug for all that hate you've locked up inside. Is there a way we could meet on neutral ground? I can bring the dogs. A few good licks to the face could cheer you right up. It certainly couldn't hurt, lol. Sigh.