Yes.
Thanks Greenspan, Bernanke, and Yellen.
Whereas for decades I could get a very safe 5%-6% return on bonds and savings account I can now get 0.50%. And I will never complain about this. Or even point this out. I know that your interests are much more important than the needs of hundreds of millions of Americans.
There's no such thing as a free lunch, my friend. If you want a positive return against inflation, you need to accept some risk. For someone like you who doesn't like risk, you can expect very little return. It's always been that way, my friend. I'm surprised you didn't know that.
[quote]Pointing Out the Obvious wrote:
There's no such thing as a free lunch, my friend. If you want a positive return against inflation, you need to accept some risk.
Never had to take a big risk to get a 5% to 6% return prior to Greenspan et al cutting the Fed charges the big banks to 0%. And, if inflation rose, you got much higher rates in safe money markets.
Never before have safe investments paid out returns well below actual inflation.
Not sure why you so readily accept getting crapped on by the elite gangsters currently running our system. You somehow think getting abused by the elites is a good thing
[quote]Pointing Out the Obvious wrote:
There's no such thing as a free lunch, my friend. If you want a positive return against inflation, you need to accept some risk.
Never had to take a big risk to get a 5% to 6% return prior to Greenspan et al cutting the Fed charges the big banks to 0%. And, if inflation rose, you got much higher rates in safe money markets.
Never before have safe investments paid out returns well below actual inflation.
Not sure why you so readily accept getting crapped on by the elite gangsters currently running our system. You somehow think getting abused by the elites is a good thing.
There is a word for that. Oh yeah. Stupid
K5 wrote:
Not sure why you so readily accept getting crapped on by the elite gangsters currently running our system. You somehow think getting abused by the elites is a good thing.
There is a word for that. Oh yeah. Stupid
If earning 20+%/yr like 2013 is considered "getting crapped on", then they can keep piling it on. If that makes me stupid, what word should we use for someone who pulled out in the midst of this bear market and is losing buying power while awaiting the Dow to get to 13,000?
don't savings account usually trail inflation by a little bit?
Now is the same - you can get 0.9% in a savings account and inflation is around 1.2%. You are losing money, but it's not a disaster.
If you made 3% in a savings account but inflation were 3.5% would you feel any better? You shouldn't.
Aunt Sally wrote:
Haven't I Seen U Somewhere B4? wrote:Did you think that I was K5?
Dude, you could not possibly be more wrong.
But it was a nice try. I guess.
I was replying to K5. Was that not obvious to you, fake "Pointing Out the Obvious"?
Hi fake Pointing out the obvious, fake K5, fake Bigfoot and fake Aunt Sally.
Perhaps we could just shorten it to Mr. Fake.
Yes, it was quite clear who you were replying to since your post said, "in reply to Haven't I Seen U Somewhere B4?"
That made it really easy to see, even for a simpleton like me.
agip wrote:
don't savings account usually trail inflation by a little bit?
Now is the same - you can get 0.9% in a savings account and inflation is around 1.2%. You are losing money, but it's not a disaster.
If you made 3% in a savings account but inflation were 3.5% would you feel any better? You shouldn't.
http://www.bankrate.com/funnel/savings/savings-results.aspx?local=false&IRA=false&prods=33&ic_id=CR_searchMMASavingsRates_checking_MMASavings
When adjusted for inflation, CD returns from 1983-2012 averaged 2.05% (an amount K5 has referred to as "inconsequential"). Meanwhile for the same time frame, the S&P averaged returns of 7.68%.
More recently, during the last 4 years of that period, CD returns were actually negative so buying power was being lost. At the same time the S&P saw an adjusted return of nearly 12.5%.
[quote]Pointing Out the Obvious wrote:
[quote]agip wrote:
When adjusted for inflation, CD returns from 1983-2012 averaged 2.05% (an amount K5 has referred to as "inconsequential").
Wow are you stupid or dishonest. I have done just the opposite, noting that historically one could get safe investment return in excess of inflation. And that has been taken away from us.
Seeing as how you looked at CDs right thru 2012, I think we can fairly conclude that if we look at rates thru 2000, the returns adjusted for inflation were quite a bit higher than 2%.
Who benefits from a system where one has a successful career and accumulates a couple of million dollars over several decades but is forced into betting a big part of it on equities in order to get any kind of income from his investments?
The bookies. That's who. Those who charge you to buy and sell and to advise you.
agip wrote:
don't savings account usually trail inflation by a little bit?
Now is the same - you can get 0.9% in a savings account and inflation is around 1.2%. You are losing money, but it's not a disaster.
No.
That is why the recent situation is unusual. The Fed is forcing interest rates lower than they should naturally be. This is "unusual". Unusual = not usually this way... i.e. different than what is typcial.
Aren't you supposed to be a financial advisor? You don't understand basics like this?
K5 wrote:
Wow are you stupid or dishonest. I have done just the opposite, noting that historically one could get safe investment return in excess of inflation. And that has been taken away from us.
Seeing as how you looked at CDs right thru 2012, I think we can fairly conclude that if we look at rates thru 2000, the returns adjusted for inflation were quite a bit higher than 2%.
Hmmm...stupid or dishonest? Well I'm certainly not dishonest as all of the facts I have provided are easily verified. I did, in fact, show that the average CD return is in excess of inflation. As for stupid, as we've seen above that may not be so bad. :-)
So you asked about CD rates through 2000. Well, adjusted for inflation they averaged a bit below 3.5%. Since you stated 2% was inconsequential, I'm guessing you're not too thrilled with that number either. That will be especially true when you compare it to the adjusted S&P average of nearly 13.8% for the same period.
Highlighter of Intelligence wrote:
agip wrote:don't savings account usually trail inflation by a little bit?
Now is the same - you can get 0.9% in a savings account and inflation is around 1.2%. You are losing money, but it's not a disaster.
No.
That is why the recent situation is unusual. The Fed is forcing interest rates lower than they should naturally be. This is "unusual". Unusual = not usually this way... i.e. different than what is typcial.
Aren't you supposed to be a financial advisor? You don't understand basics like this?
Printing out money like crazy ("Quantitative Easing") which should be inflationary but then giving the money to the Big Banks at 0% interest rates which keeps the interest rates on savings and loans (well, not credit card), artificially low. What could go wrong?
Bigfoot Investments wrote:
According to my calculator, a dip from around 15,000 (I believe that this is what K5 claims to have been his exit point) to 14,000 is a drop of 9.3%.
I see you didn't follow my advice about getting a new calculator. But let's be honest...it's not the calculator's fault. I hope investments are not your line of work, if you keep making the same miscalculation on something as simple as this.
Pointing Out the Obvious wrote:
Bigfoot Investments wrote:According to my calculator, a dip from around 15,000 (I believe that this is what K5 claims to have been his exit point) to 14,000 is a drop of 9.3%.
I see you didn't follow my advice about getting a new calculator. But let's be honest...it's not the calculator's fault. I hope investments are not your line of work, if you keep making the same miscalculation on something as simple as this.
Ah, I see that Mr. Fake is back in business. Well done, lad. So frustrated by your inability to delete my posts now that you have to go back to some trivial error that was already acknowledged.
Well, perhaps we should just add Dr. Lame to your numerous titles, huh Mr. Fake?
As far as actual substance, well let's just hope that you can bring a bit more in that regard than you bring in the integrity department. So far I have not been impressed.
Highlighter of Intelligence wrote:
agip wrote:don't savings account usually trail inflation by a little bit?
Now is the same - you can get 0.9% in a savings account and inflation is around 1.2%. You are losing money, but it's not a disaster.
No.
That is why the recent situation is unusual. The Fed is forcing interest rates lower than they should naturally be. This is "unusual". Unusual = not usually this way... i.e. different than what is typcial.
Aren't you supposed to be a financial advisor? You don't understand basics like this?
You didn't answer my question with any information. I didn't ask about how Fed policy affects saving account rates.
Anyone have any data on historical average savings account returns vs inflation? Or even any solid anecdotal memory? I'd be surprised if savings accounts beat inflation. But I am willing to be surprised.
ok, I found this chart - no idea if it is accurate.
the chart suggests that around half the time 3 month treasury bills return less than inflation (that is, they have a negative real return)
If we make the assumption that 3 month treasury bills are roughly equivalent to what you can get in a savings account, then it looks like around half the time, savings accounts return less than inflation.
which would suggest our current situation, 0.9% savings accounts and 1.2% inflation is not unusual. So k5 should stop complaining. and others should stop saying that we are in an unusual time, per real interest rates.
But I am equating 3 month t bills with savings accounts with no real data to support that assumption. could be an incorrect assumption.
agip, you may find this link interesting. It compares CD rates with the S&P 500, both before and after inflation adjustments...
Bigfoot Investments wrote:
Pointing Out the Obvious wrote:I see you didn't follow my advice about getting a new calculator. But let's be honest...it's not the calculator's fault. I hope investments are not your line of work, if you keep making the same miscalculation on something as simple as this.
Ah, I see that Mr. Fake is back in business. Well done, lad. So frustrated by your inability to delete my posts now that you have to go back to some trivial error that was already acknowledged.
Well, perhaps we should just add Dr. Lame to your numerous titles, huh Mr. Fake?
As far as actual substance, well let's just hope that you can bring a bit more in that regard than you bring in the integrity department. So far I have not been impressed.
You may call me what you want, sir. That does not change the fact that you have repeated a mistake on a simple calculation even after it was pointed out to you. Though I can understand how your obvious embarrassment has led you to try to change the subject.
Pointing Out the Obvious wrote:
agip, you may find this link interesting. It compares CD rates with the S&P 500, both before and after inflation adjustments...
https://content.putnam.com/literature/pdf/II514.pdf
ok thanks.
CD rates are always higher than savings rates tho - I would expect 1-3 year CDs to beat inflation, and do 75% of the time, according to your chart.
Right now 3 year CDs are at 1.2%, exactly the inflation rate. Which, by your chart, only happens 25% of the time.
On the other hand, this is only 3o years of data - I'd like to see the previous low interest rate environment (1940-1960) to make a better conclusion.
so still...in real terms, interest rates available to consumers...not historically bad, but unusually low. But not insanely low. Because inflation is so low.
agip wrote:
Pointing Out the Obvious wrote:agip, you may find this link interesting. It compares CD rates with the S&P 500, both before and after inflation adjustments...
https://content.putnam.com/literature/pdf/II514.pdfok thanks.
CD rates are always higher than savings rates tho - I would expect 1-3 year CDs to beat inflation, and they do 75% of the time, according to your chart.
Right now 3 year CDs are at 1.2%, exactly the inflation rate. it is worth noting, by your chart, that real returns on CDs are negative a full 25% of the time.
On the other hand, this is only 3o years of data - I'd like to see the previous low interest rate environment (1940-1960) to make a better conclusion.
so still...in real terms, interest rates available to consumers right now...not historically bad, but unusually low. But not insanely low. Because inflation is so low.
I edited for clarity above
