That's 11 cents a day on a $100,000 investment.
Huh?
Craziest thing I've ever seen. That and the 10-year falling below 3%.
The US government is making cash worthless. They're FORCING the market out of bonds, and into riskier assets. They're making it real attractive for people to refi, and not default on their homes. They're making money real, real, real cheap. And they're FORCING savers out of cash.
Books and movies will be written about this one day.
Craziest thing I've ever seen.
| Date | 1 mo | 3 mo | 6 mo | 1 yr | 2 yr | 3 yr | 5 yr | 7 yr | 10 yr | 20 yr | 30 yr |
|---|---|---|---|---|---|---|---|---|---|---|---|
| 11/03/08 | 0.20 | 0.49 | 1.07 | 1.31 | 1.45 | 1.69 | 2.71 | 3.21 | 3.96 | 4.73 | 4.33 |
| 11/04/08 | 0.29 | 0.48 | 1.03 | 1.28 | 1.39 | 1.59 | 2.56 | 3.06 | 3.81 | 4.58 | 4.20 |
| 11/05/08 | 0.16 | 0.40 | 0.90 | 1.22 | 1.36 | 1.64 | 2.50 | 2.99 | 3.73 | 4.49 | 4.13 |
| 11/06/08 | 0.13 | 0.32 | 0.83 | 1.17 | 1.28 | 1.63 | 2.46 | 3.01 | 3.75 | 4.52 | 4.19 |
| 11/07/08 | 0.13 | 0.31 | 0.83 | 1.20 | 1.33 | 1.71 | 2.56 | 3.11 | 3.83 | 4.57 | 4.25 |
| 11/10/08 | 0.11 | 0.29 | 0.91 | 1.16 | 1.27 | 1.78 | 2.51 | 3.06 | 3.82 | 4.50 | 4.21 |
| 11/12/08 | 0.10 | 0.18 | 0.75 | 1.03 | 1.19 | 1.60 | 2.37 | 3.00 | 3.75 | 4.44 | 4.17 |
| 11/13/08 | 0.08 | 0.22 | 0.93 | 1.16 | 1.24 | 1.62 | 2.43 | 3.07 | 3.84 | 4.57 | 4.34 |
| 11/14/08 | 0.06 | 0.15 | 0.90 | 1.14 | 1.22 | 1.53 | 2.33 | 2.94 | 3.72 | 4.43 | 4.22 |
| 11/17/08 | 0.06 | 0.12 | 0.81 | 1.08 | 1.22 | 1.53 | 2.32 | 2.92 | 3.68 | 4.42 | 4.20 |
| 11/18/08 | 0.10 | 0.12 | 0.76 | 1.05 | 1.15 | 1.44 | 2.22 | 2.79 | 3.53 | 4.32 | 4.14 |
| 11/19/08 | 0.09 | 0.07 | 0.66 | 0.97 | 1.09 | 1.36 | 2.08 | 2.64 | 3.38 | 4.17 | 3.96 |
| 11/20/08 | 0.05 | 0.03 | 0.52 | 0.87 | 1.00 | 1.20 | 1.94 | 2.43 | 3.10 | 3.87 | 3.64 |
| 11/21/08 | 0.03 | 0.02 | 0.45 | 0.83 | 1.09 | 1.35 | 2.02 | 2.53 | 3.20 | 3.93 | 3.70 |
| 11/24/08 | 0.01 | 0.13 | 0.54 | 0.95 | 1.31 | 1.53 | 2.24 | 2.71 | 3.35 | 4.01 | 3.78 |
| 11/25/08 | 0.04 | 0.10 | 0.53 | 0.95 | 1.15 | 1.41 | 2.06 | 2.49 | 3.11 | 3.85 | 3.63 |
| 11/26/08 | 0.02 | 0.05 | 0.48 | 0.93 | 1.09 | 1.38 | 2.01 | 2.43 | 2.99 | 3.77 | 3.54 |
| 11/28/08 | 0.02 | 0.01 | 0.44 | 0.90 | 1.00 | 1.27 | 1.93 | 2.35 | 2.93 | 3.71 | 3.45 |
Posts
50 comments:
These yields (negative on any real measure) represent chaos in the markets. The distortions from various bailouts and interventions are now so extreme that the notions of investing or safety no longer have meaning. Anything could happen, and anyone who thinks they know the outcome is deluded.
The hard working savers are being punished (again) while the FED tries to ignite another bubble and more "gambling".
We are soooo screwed and broken. The FED should be disbanded immediately. It is an unaccountable private entity masquerading as a part of the government...and it is running this country into the ground.
One reason "financial advisers" said don't buy gold is because it doesn't pay interest.
Hmmmm...
Looks like bonds don't pay interest anymore either.
Gold based on a limited resource or bonds based on, well, nothing.
Hmmm... tough choice
In a deflationary scenario where other asset classes decline 10, 20, 30 or 40% and consumer prices also decline; 0% is a relatively good deal.
Was 3% then demonstrably different when inflation was 6%+?
So I'm not sure about people being forced from bonds, because somebody is buying them, otherwise rates would have to go much higher, no?
My theory is that Bernanke is taking bond rates to 0% or as close to 0% as he can possibly get them, while at the same time setting the dollar up for serious destruction, making holding 10-year t-bills a fool's game.
He's forcing investors out of bonds, come hell or high water.
Why?
So that they'll put money to work in stocks, real estate, commodities, etc
It's actually not a bad strategy. And he pretty much told us exactly what he would do in this scenario, in his famous 2002 helicopter/printing press speech.
Invest wisely. You've been told what is going to happen before it happens. Chance of a lifetime.
Just wait until when we have a collapse in the bond market due to the never ending printing presses.
You are witnessing the destruction of capitalism not only in America, but also the world. Ask yourself, who benefits from this?
He's forcing investors out of bonds, come hell or high water.
I think you hit this one Keith. We will inflate inflate inflate, even if the government has to borrow (kept secret of course) and buy the stocks, real estate, commodities etc. If the consumer won't borrow (pushing on a string), then the government will. Inflation it shall be. So let it be written, so let it be done.
In this market individuals and banks are willing to park money for free to get safe storage.
so where is the chance of a lifetime?
where do you invest cash?
For all of us novice investors, could you reiterate our best investment options, Keith? I am so confused at this point, I don't know what makes the most sense.
AP
Chinese leader says China losing competitive edge
Maybe the Chinamen should sell some of thier bonds.
And buy gold!
So Keith
What do you think we should invest in now?
Looks like the return in my savings account. Pathetic. Thanks Ben.
I never thought I would get to this point, but I'm thinking about ordering/taking delivery of 100 ounces at Comex and holding gold instead of dollars that will just continue to lose value. Sooooo tired of being punished for being a saver.
I can't believe OPEC didn't drop it's output. I find it surprising and am trying to figure out why.
OPEC's target price is $70-$90 and the price is at $54 yet they have not cut supply to increase price.
Did OPEC talk to Paulson and Bernanke and receive assurances that the price of oil would rise on its own anyway due to massive, massive USD printing?
I'm trying to decide whether I think the money not invested in t-bills will pile into oil. Will it quickly pile into alternative energy as well? I already have some money in alternative energy but this is a play on obama's new new deal moreso than a play on rising energy prices.
Maybe they're trying to force rates down so that when the Option and Alt-A loans start to reset in 2010, they'll reset to a rate low enough for people to afford.
.
If the rates stay low enough for a while, maybe people will refinance out of these crazy loans at a decent rate, and the other shoe won't drop.
.
Ref Chart here: http://calculatedrisk.blogspot.com/2007/10/imf-mortgage-reset-chart.html
Bonds other than US Bonds are paying once in a generation yields. I'm now buying junk and muni cefs, expecting a 50% haircut on the yield. I'm also keeping 50% in cash....just in case of the 'end of the world as we know it' scenario comes to fruition. Yes, I bought more BAC a week and a half ago.
May you live in interesting times.
keyser soze
but I'm thinking about ordering/taking delivery of 100 ounces at Comex
Lady Di,
APMEX is offering Silver Eagles at $3.49 over spot through Dec 1. One of the best prices you'll see out there at the moment. Pick up a few tubes; it might make you feel a little better. Every time I take fiat dollars out of their system, I feel great.
Our perpetually growing world economy requires a perpetually growing money supply. Since our money supply is generated almost exclusively by credit (debt), we are forced into a massive deflationary spiral since peak credit has put the brakes on the money supply. This was only delayed by the dot.com bubble and the housing bubble. You can't force consumers to generate more money supply with more debt since we are at/near a debt maximum. All the money funneling into treasuries ,as a safe haven, doesn't circulate into the economy which only exacerbates things. Our national debt (US) is taking second place to the economic contraction taking place. Bernanke can perform inflationary maneuvers to counter the deflationary spiral. Bernanke won't intentionally HYPERinflate as that is a terminal endpoint. Physical gold because of its perceived value throughout the ages, is presently retaining its value. Gold may go up in price because of an large increase in demand. Will it retain that value in the intermediate/long term? Many on this blog are Ron Paul supporters. How sad it is that he was one of our few political leaders to speak of the importance of a "sound" monetary system.
Keefer for real.
Please explain to us why Gold has any value outside of Jewelry.
We all know that precious metals where used as a currency for a loong time, but so did anything else humans can barter or trade.
I mean if anything, Gold is practically useless and there are many more ‘rare natural’ commodities out there.
I think your theory is correct that huge inventory of dollars may create inflation, but am just not sure that gold is a safe bet.
Don’t know what is, but I’m betting against gold as a tool to beat inflation.
Mark my words.
Doesn't this seem rational when cash is King and every other investment vehicle has lost value this year?
Open question to the wonks:
Does anyone here get invited to parties anymore?
I can still go out and have a good time with my friends who have no clue what's about to happen in '09 but I find that I have to bite my tongue about a lot of topics.
Roccman, there's no way anyone wants you at their parties. You would make a Jimmy Carter speech look like an episode of American Bandstand.
Interesting article:
http://seekingalpha.com/article/108415-gold-the-next-reserve-currency-player
I feel like I'm seeing more 'chatter' about gold these days, not just on this blog. But I might just be looking for it more since I got into gdx a few days ago.
T-Bills going down is not by design of old Ben or hammerin' Hank. It is because people are scarred shitless. B & H would kill for 10% inflation right now if they could generate it. The thing about Fiat money is that it can be destroyed as easily as it is created. It seems we keep forgetting this. The toxic securities are now iconic for anti-money and are destroying real money when the two touch.
The T-bill flight is like people rushing to the end of the ship that has not sunk.
Don
PS ... Anybody up for a contest on what the new wold currency will be named?
How about
Worldo
Gia
Watt
BTU
Anyone still betting on sports is missing the boat. Welcome to the greatest Casino of them all, NOW anywhere in the world near us. In this casino we bet on commodities, real estate, your gold teeth and the grand daddy of the all the stock market!
Don't want to participate we bet on that too. So folks step up to the plate and be F'ed.
Ross said...
Does anyone here get invited to parties anymore?
I can still go out and have a good time with my friends who have no clue what's about to happen in '09 but I find that I have to bite my tongue about a lot of topics.
Roccman, there's no way anyone wants you at their parties. You would make a Jimmy Carter speech look like an episode of American Bandstand.
--------------------------------
Why would you want to go to parties with people that have no clue? You have to bite your tongue around the people you party with?
Better to have a few close, enlightened, informed friends over and talk about the real world. Hell, you might learn something new. Wow what a concept.
Roccman would be welcome at our party even if we don't agree with everything he believes, at least he has taken the time to be informed and draw his own conclusions.
Enough with the biting the tongue for fake, ignorant ass people.
Doctor Housing Bubble:
November 30th, 2008
Squandering Ourselves into Economic Prosperity: Lessons from the Great Depression: Part XXII.
The Infection of Consumerism and Living Fake Lives.
http://tinyurl.com/2psn7s
Kids,
This is not news. This is just packaged as new and insightful. It's not.
It's just Econ-101. We're in a recession. The only way to end it is for prices/wages to fall. Problem is, that causes a lot of pain as many people lose their jobs, and folks whine when their wages drop (sticky wages). So the govt. is driving inflation as fast as they can, in effect lowering wages, hopefully reducing the timeframe.
They're driving inflation to meet up to the deflation in RE assets as well. The "true value" it needs to get to arrives quicker.
You're just now getting this?
Extra homework for you.
Class dismissed.
The American government is the most powerful entity in the world. Sorry doom and gloom folks; but the world still trusts us and puts it's faith on us. Because money is flowing to us, we can finance our spending binge and nothing will happen. But if the flow of money stops, then watch out below.
JANEZ
You are actually a hero of mine for one of the posts that you sent about feminism/consumerism wrecking America.
I do have a few enlightened friends, but I find that I have to be the "enlightener" more often than not. I choose not to ostracize myself from ignorant people, even though I know better.
I will always be in the trenches, no matter how ignorant my fellow soldiers are. (ugh, i hate cheesy war references. my apologies)
Roccman's posts want me to give up on life. What's your solution to this mess? I am serious.
They will try but fail just like Japan did. Unless they start sending monthly stimulus checks it's deflation from here on out.
Please explain to us why Gold has any value outside of Jewelry.
Yeah, jewelry really doesn't do that well in a recession.
A little off subject, but there's a picture of some wine and cheese on the back on my Triscuits box. Seem more appropriate there than on the sales job for a condo.
As in, Ummm, I like wine and cheese. I think I'll buy some Triscuits. That's a leap I can follow.
Keith,
You ain't seen nothing yet. They will squeeze blood out of the stone when they switch to the "unconventional methods". Remember, 13 papers on solving the zero bound problem. This is much an ideological experiment as Iraq was for the neocons. And I really like the part about more "hard work and sacrifice" for the American people in the O's latest. WTF? We are the hardest working, most productive. But they will squeeze us harder. God damn, but I wan't my fucking deflation. Aint gonna happen tho is it?
"Why would you want to go to parties with people that have no clue? You have to bite your tongue around the people you party with?
Better to have a few close, enlightened, informed friends over and talk about the real world. Hell, you might learn something new. Wow what a concept."
You can tell most of the people posting on this blog are under 30...bunch of naive idealists. Mark my words, your Friday nights will be spent alone by the time you're 25. One by one you will find your differences and eliminate people from your little four-person elitist gatherings.
I've got news for you, youngster - nobody is enlightened, informed, or capable enough of discussing the real world, in one way or another.
Anonymous yu been skooled said...
Kids,
This is not news. This is just packaged as new and insightful. It's not.
It's just Econ-101. We're in a recession. The only way to end it is for prices/wages to fall. Problem is, that causes a lot of pain as many people lose their jobs, and folks whine when their wages drop (sticky wages). So the govt. is driving inflation as fast as they can, in effect lowering wages, hopefully reducing the timeframe.
They're driving inflation to meet up to the deflation in RE assets as well. The "true value" it needs to get to arrives quicker.
You're just now getting this?
Extra homework for you.
Class dismissed.
December 1, 2008 12:57 AM
Actually, you need to go back to school and do your homework/analysis again. This is the endgame. Japan tried the same little game and they still ran up against a devastating bout with deflation. Go back to school, do your home work and do your your analysis!
Well the multiplier effect will generate 3.1 times the revenue generating increased tax income which will offset the subsidies of lowered govt. yields.
Oh and by the was bankers that doesn't mean we'll increase your taxes, we'll go and give you a tax break to help kick start the economy. You guys have been through enough this year. You're lobbyists are a bunch of fun guys! Wouldn't want to disappoint them!
Keith Said:
It's actually not a bad strategy. And he pretty much told us exactly what he would do in this scenario, in his famous 2002 helicopter/printing press speech.
-----------
Theory of Relativity:
Everyone's doing it. Printing presses and helicopters are working overtime around the world.
I think Peter Schiff made the mistake of looking at the US in isolation. Do we get to hyperinflation if everyone else in the world has hyperinflation too?
Just asking.
MISH Said:
With stimulus running rampant, and monetary mistakes everywhere one looks, those looking for a complete collapse in the US dollar are unlikely to see it.
Ross Said:
Does anyone here get invited to parties anymore?
I can still go out and have a good time with my friends who have no clue what's about to happen in '09 but I find that I have to bite my tongue about a lot of topics.
---------
I know what you're talking about, Ross. Which is why I propose that we stop calling everyone Sheeple. I believe the goat is a more apt choice. Why? Well, you can herd them like sheep, but when you look them in the eye, nobody's home. It's like looking into a void. It's the same look that people gave me when I'd talk about housing or the coming depression. Sheep are friendly and alert. Goats are also friendly...but I can't get past the far-off look in their eyes. Also, they do eat almost anything, which will be a bonus in the next few years.
Here's a picture. Looks like they're trying really hard to think.
http://sheepindustrynews.com/Targeted-Grazing/images/goats.jpg
Ross said, "Roccman, there's no way anyone wants you at their parties. You would make a Jimmy Carter speech look like an episode of American Bandstand."
And I do not want anyone at my party...read The Feast of Malthus...nothing personnel...just reality.
Enjoy the dieoff.
Really...it has already started.
JaneZ said, "Roccman would be welcome at our party even if we don't agree with everything he believes, at least he has taken the time to be informed and draw his own conclusions. "
And I'll bring some food too.
Thanks!!
Ross said, "Roccman's posts want me to give up on life. What's your solution to this mess? I am serious."
The plan?...for you to give up.
More for me and mine.
Have fun with all that.
Good article on currencies at FT today:
http://tinyurl.com/5pnmvt
Bottom line (for dollar holders) - enjoy the Great Unwinding. I know I am here in England.
But eventually, it will be unwound. And then, what becomes of the dollar? And what interest rate will the US have to pay on debt?
Patience... but not too much. And an epic and historic could happen overnight. For any paper currency, including the pound.
May you live in interesting times.
Anonymous said...
You can tell most of the people posting on this blog are under 30...bunch of naive idealists. Mark my words, your Friday nights will be spent alone by the time you're 25. One by one you will find your differences and eliminate people from your little four-person elitist gatherings.
I've got news for you, youngster - nobody is enlightened, informed, or capable enough of discussing the real world, in one way or another.
I am a boomer. My daughter is 27? Most of our friends have been our friends for 20 or more years. We like them because they read the newspaper and pay attention to what goes on around them. They also have hobbies and interests besides shopping and real estate.
That is all I really meant about "enlightened".
We don't have the Dalai Lama over for potlock or anything like that, but thanks for the wizened wisdom.
Should have known it. Keith starts going off on gold, then it drops off a cliff. Nice job Keith.
It's still going to the moon, but it's trip is via the Grand Canyon because of YOU.
Ross said...
JANEZ
I do have a few enlightened friends, but I find that I have to be the "enlightener" more often than not. I choose not to ostracize myself from ignorant people, even though I know better.
Roccman's posts want me to give up on life. What's your solution to this mess? I am serious.
You know Ross, maybe "enlightened" was the wrong word LOL. We don't have the Dalai Lama over for ribs or anything. We don't ostracize we just want to feel comfortable with our friends, but our acquaintances that want to start the "my dog is better than your dog" don't get invited over anymore. I have to bite my tongue too when we go out or else I get the husband's elbow.
Remember the pictures of the people on the beach standing and watching the tsunami approach with their cameras? Everyone jokin and pointing at the wave, WOW look at that! Look at all them little fishies flippin around. And then...wait for it.... ruh roh.
Ya just didn't know whether to laugh or cry. But yea, people really can be that damn ignorant.
The solution is to hope for the best but prepare for the worst. I am slowly moving from the "pissed off state of discovery and blame" to the "damn we better get our shit together stage". Roccman could be stuck in the former.
Let the wave wash over the goats (perfect Wind Farmer). It's called gene pool cleaning. Maybe the wave will take Nick out and we won't have to pay his bills after all.
BWHAHAHAHA
"My daughter is 27? "
Is she hot?
JANEZ
Again, I agree with you. I'm ready for the solutions and done with the anger stage.
I hope my formerly nice city of Phoenix doesn't turn in to a scene out of Road Warrior before the solutions come.
The people and leadership of this city were arrogant, selfish and flashy. We are now reaping all that was sown. Most of my friends have been laid off this year and are now coming to me for answers. I really don't know what to tell them, other than be prepared to move.
For the record, I'm 27 years old if that is so important to everyone here.
and if they had been higher and earned more than my expenseses i might have spent the remaining on stocks like 1982
if five pills taken daily for two years could truly revitalize cells and reverse the aging pricess so we all had composite cellular ages of 18 while preventing disease and illness our economy would colapse as the percentage of the economy that was medical services would lose 90 percent of its demand and unemploy millions ( so "lets not let it happen" morons will still be morons even if bailouts are given to the medical community./
and what does that have to do with the financial sector becoming what? large percentage of the economy?
Well now we know why the bond market hit 0% on Friday.
Because they knew the stock market would crash on Monday.
Damn, they're good.
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