4 ms·

Safe place? Ask investors in Argentine, Russian, and Greek government debt about that. The U.S. government is already working to cheat its debt investors by r

Safe place? Ask investors in Argentine, Russian, and Greek government debt about that. The U.S. government is already working to cheat its debt investors by repaying them with devalued printed paper. One could argue that U.S. government debt is one of the least safe investments out there. You will get repaid, but it will be in devalued currency. That dollar you invested 5 years ago, for example, only buys about 1/3 as much oil as it did when you invested it. That is a catastrophic loss.

mkr-hn 15y ago
Traditionally safe. The recent (past 30 or so years) unwillingness of the congress to invest that money into maintaining growth (things like infrastructure maintenance/improvement--"pork projects" as people like to call them) has started to compromise that. Corporate lobbyists haven't helped much either.
- watchandwait 15y ago
  Please don't just rely on the nonsense they taught you in econ 101. You need to understand the relationship between debt, the currency, interest rates, and a government's ability and willingness to repay. These factors make government debt potentially VERY risky. Even in the U.S., which is generally very responsible, government debt has been a terrible investment at times through the years. The U.S. massively devalued during the Great Depression and devalued again after World War Two. An investment in a U.S. ten-year bond in the late-1960s would have been absolutely creamed, I'm talking about losing much of the real value of your investment. That's not anyone's idea of safe.
  - mkr-hn 15y ago
    Compared to the stock market (Depression) or moving your money overseas (WW2)? It seems like the US was still the best of what was available at the time. Gold and commodities would have been toast in an invasion (the axis invading the US) or collapse of society (French Revolution-style uprising). Giving the government all your money to keep it afloat in those situations was still superior, even if the government ended up ruining the value.
recoiledsnake 15y ago
>That dollar you invested 5 years ago, for example, only buys about 1/3 as much oil as it did when you invested it. That is a catastrophic loss. Good point but really bad example which bring your intentions into question. Oil is in high demand, thus the price has increased. You should've picked a relatively stabler item to compare the price of. Also, how much interest did you gain on the dollar in 5 years? An investment is not the same as putting a dollar bill in your pocket.
- watchandwait 15y ago
  Oil is not in high demand. US demand is actually down b/c of the recession and the higher price in dollars. It just takes more dollars to buy the same amount. You could also measure against corn, or gold, or the cost of college. It's been pretty ugly for the dollar for the past 11 years, and it may get worse.
  - wiredfool 15y ago
    Quite a lot of the commodities change is the investment banks slamming a lot of hot money into commodities.
uvdiv 15y ago
Inflation-indexed US bonds: http://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm http://www.treasurydirect.gov/indiv/products/prod_tips_glanc...
guelo 15y ago
There's a reason economists look at core inflation which excludes energy and food, if you did that your whole argument would fall apart. Inflation is too low right now considering the high unemployment.
- rgraham 15y ago
  So if you eliminate the commodities that are rising against the dollar (or insert currency here) and that everyone has to buy you can assert that there is no inflation? Is core inflation defined as the things people don't buy that are not currently changing in value? Do you want to add hedonics and substitution?

mkr-hn 15y ago

Traditionally safe. The recent (past 30 or so years) unwillingness of the congress to invest that money into maintaining growth (things like infrastructure maintenance/improvement--"pork projects" as people like to call them) has started to compromise that. Corporate lobbyists haven't helped much either.

watchandwait 15y ago
Please don't just rely on the nonsense they taught you in econ 101. You need to understand the relationship between debt, the currency, interest rates, and a government's ability and willingness to repay. These factors make government debt potentially VERY risky. Even in the U.S., which is generally very responsible, government debt has been a terrible investment at times through the years. The U.S. massively devalued during the Great Depression and devalued again after World War Two. An investment in a U.S. ten-year bond in the late-1960s would have been absolutely creamed, I'm talking about losing much of the real value of your investment. That's not anyone's idea of safe.
- mkr-hn 15y ago
  Compared to the stock market (Depression) or moving your money overseas (WW2)? It seems like the US was still the best of what was available at the time. Gold and commodities would have been toast in an invasion (the axis invading the US) or collapse of society (French Revolution-style uprising). Giving the government all your money to keep it afloat in those situations was still superior, even if the government ended up ruining the value.

recoiledsnake 15y ago

>That dollar you invested 5 years ago, for example, only buys about 1/3 as much oil as it did when you invested it. That is a catastrophic loss. Good point but really bad example which bring your intentions into question. Oil is in high demand, thus the price has increased. You should've picked a relatively stabler item to compare the price of. Also, how much interest did you gain on the dollar in 5 years? An investment is not the same as putting a dollar bill in your pocket.

watchandwait 15y ago
Oil is not in high demand. US demand is actually down b/c of the recession and the higher price in dollars. It just takes more dollars to buy the same amount. You could also measure against corn, or gold, or the cost of college. It's been pretty ugly for the dollar for the past 11 years, and it may get worse.
- wiredfool 15y ago
  Quite a lot of the commodities change is the investment banks slamming a lot of hot money into commodities.

uvdiv 15y ago

Inflation-indexed US bonds: http://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm http://www.treasurydirect.gov/indiv/products/prod_tips_glanc...

guelo 15y ago

There's a reason economists look at core inflation which excludes energy and food, if you did that your whole argument would fall apart. Inflation is too low right now considering the high unemployment.

rgraham 15y ago
So if you eliminate the commodities that are rising against the dollar (or insert currency here) and that everyone has to buy you can assert that there is no inflation? Is core inflation defined as the things people don't buy that are not currently changing in value? Do you want to add hedonics and substitution?