New I Bond Rate - May 1, 2015

Discussion of the Cash portion of the Permanent Portfolio

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dragoncar
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Re: New I Bond Rate - May 1, 2015

Post by dragoncar » Fri May 01, 2015 7:46 pm

barrett wrote:
dragoncar wrote: Why the sad face?  .8% real is better than 0% real!  I thought people were glad Ibonds couldn't go negative for just this reason.
The composite rate of return on new bonds is 0%, not .8%. Can someone explain to me why anyone would lend the government money for nothing in return? Safer than a bank? A mattress?
Dude, you've been here long enough to understand real vs. nominal return.
barrett
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Re: New I Bond Rate - May 1, 2015

Post by barrett » Fri May 01, 2015 8:15 pm

dragoncar wrote:
barrett wrote:
dragoncar wrote: Why the sad face?  .8% real is better than 0% real!  I thought people were glad Ibonds couldn't go negative for just this reason.
The composite rate of return on new bonds is 0%, not .8%. Can someone explain to me why anyone would lend the government money for nothing in return? Safer than a bank? A mattress?
Dude, you've been here long enough to understand real vs. nominal return.
Right you are. I guess that mental leap to think of a 0% return actually being better than -.8% deflation was just a bit much for me. Forgive me. I have recovered. Have to learn to think like a Japanese or European investor.
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Pointedstick
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Re: New I Bond Rate - May 1, 2015

Post by Pointedstick » Fri May 01, 2015 8:26 pm

Looking at http://www.bls.gov/cpi/cpid1503.pdf, it seems like Sophie's right. Excluding food and energy, 1-year CPI is actually +1.8%.

…Which is still really low, but it's not negative.
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Desert
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Re: New I Bond Rate - May 1, 2015

Post by Desert » Sat May 02, 2015 6:16 am

Pointedstick wrote: Looking at http://www.bls.gov/cpi/cpid1503.pdf, it seems like Sophie's right. Excluding food and energy, 1-year CPI is actually +1.8%.

…Which is still really low, but it's not negative.
I'm not sure if I'm just repeating the point you made here, but just in case there is confusion: I-bonds and TIPS are based on the CPI-U, which includes food and energy. 

Hyper inflation porn folks like to talk about the core CPI, seemingly to intentionally mislead, saying things like "the CPI includes everything except stuff that's goin' up, like food and energy!" 
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Re: New I Bond Rate - May 1, 2015

Post by Pet Hog » Sat May 02, 2015 2:11 pm

Bean wrote: Fixed Rate = 0.00%
Inflation Rate = -0.80%
Composite rate = 0.00%


:'(
In case anyone is unaware of how I-Bond rates are calculated, this inflation rate is for the six months from September to March.  Annualized, it's –1.60%.  Even better real return at 0% nominal!
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ochotona
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Re: New I Bond Rate - May 1, 2015

Post by ochotona » Sat May 02, 2015 4:39 pm

I suppose better than a money market fund that breaks the buck.
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