Thursday, February 7, 2013

Treasury Inflation Protected Securities

It’s curious they are called securities because they are about as secure as a leaky boat.

I was paging through the Wall Street Journal and came across a table, in the Key Interest Rates section, displaying yields for Treasury Inflation Protected Securities (TIPS), as follows:

             TIPS Yields                                                                                                  
5-Year                  -1.40%
7-Year                  -0.99%
10-Year                -0.55%

Yes, these are negative returns, as in you get to pay the government to hold on to your money.  Seldom are your elected representatives and the entrenched bureaucracy so honest.

The US Treasury Department recommends you purchase TIPS to: 
  • Diversify your investment portfolio
  • Supplement retirement income 

Safely Negative
Thanks but no thanks, all you smart Lord of the Universe Treasury officials, but I'll pass.  I'll look to find investments for my retirement portfolio that actually generate  income.

Peeling away the onion, whatever portion of your money is in a traditional interest-paying government treasury bond, in a bank or credit union checking, savings, or money market account, invested in a CD or in a government securities bond fund, stashed in cash brokerage accounts or stuffed under a mattress, is also suffering from the very same negative real returns.  Negative real returns are the cost, a hidden tax imposed on somnolent unsuspecting public, of the Ben Bernanke currency printing, Tim Geithner borrowing and Barack Obama spending sprees.  Spend now.  

Party hard.  Don’t look to the future and save and invest, there’s no payoff in it.  That’s the world of Obama.  The children say thanks.

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