shah269 0 #1 June 7, 2012 http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/ Check out the interest on the 10 year notes! WOW! Am I reading this right? Interest is only %1.65? Inflation is what? %3? So..loose 1.5%? over 10 years?Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay. The only thing that falls from the sky is birdshit and fools! Quote Share this post Link to post Share on other sites
shah269 0 #2 June 7, 2012 So please correct me but woudn't you loose money over the long run?Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay. The only thing that falls from the sky is birdshit and fools! Quote Share this post Link to post Share on other sites
shah269 0 #3 June 7, 2012 Iago, Thank you! Sadly I don't have much money to "play" in the market but love economics. So the safe bet is that the economy will continue to be dead for the next 10 years but you can safely put your money here and you will not make huge money but you won't loose huge money either?Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay. The only thing that falls from the sky is birdshit and fools! Quote Share this post Link to post Share on other sites
shah269 0 #4 June 7, 2012 But people are buying these right? Otherwise the rate wouldn't be so low. Demand is high, rate is low. Demand is low, rate is high.Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay. The only thing that falls from the sky is birdshit and fools! Quote Share this post Link to post Share on other sites
DrewEckhardt 0 #5 June 8, 2012 Quotehttp://www.bloomberg.com/markets/rates-bonds/government-bonds/us/ Check out the interest on the 10 year notes! WOW! Am I reading this right? Interest is only %1.65? Inflation is what? %3? So..loose 1.5%? over 10 years? Nope. They also charge you federal income tax on the interest, so in the 28% bracket you have a 1.18% after tax return and are loosing 1.8% over 10 years. Quote Share this post Link to post Share on other sites
DrewEckhardt 0 #6 June 8, 2012 Quote Demand is high, rate is low. Demand is low, rate is high. No. You are thinking like a capitalist which is incorrect because this isn't a free market. The purpose of government is to transfer money to the people (natural, corporate, and otherwise) paying to get them elected from the rest of us. Being a Senator pays $174,000 a year. Being a Senator costs nearly 10 times that with the average successful campaign running $10M for a 6 year term which is $1,666,666.666 666 per annum - campaign fund of the beast. The arithmetic works because people (both natural and not) make campaign contributions. They make campaign contributions because it pays big dividends. The specific ideas here are to: 1. Make real interest rates negative so that we can pay people to buy houses (some ARMs have negative interest rates) as a little quid pro to the National Association of Realtors(TM) PAC which made more contributions to candidates than any other PAC in the 2010 election cycle, even heavy hitters like AT&T. 2. Maximize profits in the banking industry where the executive bonus packages have been suffering. With savers unable to make money on short term treasury securities the banks can get away paying 0.05% on deposits where they used to pay 5%. This makes for much larger profits when they lend the money to credit card users at 9% and beyond. Obviously people who have healthy cash stock piles to weather things like unemployment and to buy their adult children educations that might let them join the middle class on their own suffer as a side effect; although without the money to buy Congress Critters they don't matter. Quote Share this post Link to post Share on other sites
shah269 0 #7 June 8, 2012 Quote Nope. They also charge you federal income tax on the interest, so in the 28% bracket you have a 1.18% after tax return and are loosing 1.8% over 10 years. So what's the point of buying 10 year T bonds? And why offer them if it's a bad deal?Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay. The only thing that falls from the sky is birdshit and fools! Quote Share this post Link to post Share on other sites
weekender 0 #8 June 8, 2012 QuoteQuote Nope. They also charge you federal income tax on the interest, so in the 28% bracket you have a 1.18% after tax return and are loosing 1.8% over 10 years. So what's the point of buying 10 year T bonds? And why offer them if it's a bad deal? you are thinking way to small. there is not a very good argument for YOU to buy them. What if you had millions and billions in oil profits, for example? then what? you need to put it somewhere safe over a period of time. would you buy Euro bonds? would you buy developing nation debt? there isnt enough stock ideas in the world to cover this amount of money. fixed income transactions are so giant its hard for equity people to grasp. nearly impossible for lay people. you need to think bigger and who the buyers are. they are huge institutions, like entire nations. not you and i looking to save for retirement."The point is, I'm weird, but I never felt weird." John Frusciante Quote Share this post Link to post Share on other sites
shah269 0 #9 June 8, 2012 But over time would they not loose money? Due to the low interst rate and the average 3% inflation rate?Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay. The only thing that falls from the sky is birdshit and fools! Quote Share this post Link to post Share on other sites
weekender 0 #10 June 8, 2012 QuoteBut over time would they not loose money? Due to the low interst rate and the average 3% inflation rate? on this specific trade, they are losing money, technically. But if you believe all your other options are to lose more money then no. When you are a large institution with billions and billions your options are very limited. in the equity world, its why funds tend to perform very well till they hit a billion. at that point its very hard to buy enough stocks you like without moving them above a price you like. now imagine if your a PM for an entire nation or giant oil concern. your problems are even bigger. you need something thats mega liquid and US debt is perfect for that. losing a bit is a better option than losing a tad more than a bit. expecially, when your dealing in the numbers they deal in. Think bigger"The point is, I'm weird, but I never felt weird." John Frusciante Quote Share this post Link to post Share on other sites
kelpdiver 2 #11 June 8, 2012 Quote Being a Senator pays $174,000 a year. Being a Senator costs nearly 10 times that with the average successful campaign running $10M for a 6 year term which is $1,666,666.666 666 per annum - campaign fund of the beast. Is there data that shows the median cost rather than the mean? The California races dwarf 10 Wyomings,,,or maybe 100 Wyomings. Quote Share this post Link to post Share on other sites
