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I accidentally loaned all my money to the US government

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Re: I accidentally loaned all my money to the US government

#31

Post by throwmeariver1 »

roenxi wrote: post #22

> They're zero-risk bonds... To qualify this, there is zero risk that the technical letter of the agreement won't be honoured. Lending money to the US government is very high risk right now. Simple person metrics like debt to GDP indicate they're currently fighting a bigger war than WWII, and the trend-line says they are losing. If you lend the US government enough money to buy a sandwich there is a real risk that at…

A very high risk? A bigger war than WWII? They are losing? Citation needed and who is they if you don't mean us.

Re: I accidentally loaned all my money to the US government

#32

Post by vasco »

The venn diagram of internet users that read about super specific financial products, decide to buy them, while not even understanding the need to keep an emergency fund such that a move like this leaves them with under $200 in their account seems to be growing.

It seems to be a weird mix of wall street cosplay and financial ineptitude.

Re: I accidentally loaned all my money to the US government

#33

Post by OJFord »

postpawl wrote: post #2

“if you buy before May this year, you get a guaranteed ~8.5% return over the next 12 months” I don’t think this is correct. They’re going to re-calculate the interest rate 6 months from May and it could be less than ~8.5%. So you’re really just guaranteed ~4.25% for half the year.

Nitpick, but that's still 8.5% for half the year; it's 4.25% total return after half the year.

But anyway it staying inflation-linked is presumably what people buying it want? The more often it updates the better, could go up too.

Re: I accidentally loaned all my money to the US government

#34

Post by hirako2000 »

Zero risk loan and guaranteed interest rate doesn't mean no risk the government won't default on repayments. If that happens, it is likely to get back the full capital + interest, but at that point in a currency worth initial capital - interest. Lending to a government is only safe when trust of that government is high. At the moment we are at a all time low since the 30s with regards to the US government treasury.

Re: I accidentally loaned all my money to the US government

#35

Post by bombcar »

vasco wrote: post #32

The venn diagram of internet users that read about super specific financial products, decide to buy them, while not even understanding the need to keep an emergency fund such that a move like this leaves them with under $200 in their account seems to be growing. It seems to be a weird mix of wall street cosplay and financial ineptitude.

To be fair this mystical 8.4% has been plastered everywhere as a “buy now” which is causing serious fomo.

Also the blog clearly indicates they were going to poke the fate bear, poked said bear, and then went surprised pikachu.

Re: I accidentally loaned all my money to the US government

#36

Post by bombcar »

roenxi wrote: post #22

> They're zero-risk bonds... To qualify this, there is zero risk that the technical letter of the agreement won't be honoured. Lending money to the US government is very high risk right now. Simple person metrics like debt to GDP indicate they're currently fighting a bigger war than WWII, and the trend-line says they are losing. If you lend the US government enough money to buy a sandwich there is a real risk that at…

The key to mitigating that risk is crossing it with the same risk on the other side - for example, a mortgage. If the US dollar devalues, so does the nominal value of the mortgage.

Re: I accidentally loaned all my money to the US government

#37

Post by skeptikal »

SpaceL10n wrote: post #28
roenxi wrote: post #22

> They're zero-risk bonds... To qualify this, there is zero risk that the technical letter of the agreement won't be honoured. Lending money to the US government is very high risk right now. Simple person metrics like debt to GDP indicate they're currently fighting a bigger war than WWII, and the trend-line says they are losing. If you lend the US government enough money to buy a sandwich there is a real risk that at…

The I-bond guarantees a return rate at inflation or higher. You're saying you expect negative inflation this year?

Even if we assume the measurers of inflation are honest, using honest metrics, inflation is hard to measure and the measurement has a natural skew downwards.

We’ve all heard about shrink inflation by now. Theoretically that’s measurable by taking the Oz. into account.

But how about the drop in quality of goods? Raisin Bran with few raisins, cars with thinner door panels, etc. This is impossible to measure, obviously happens, and is systematic in one direction resulting in a lower reported inflation rate.

Re: I accidentally loaned all my money to the US government

#38

Post by bombcar »

beaconstudios wrote: post #17
Guthur wrote: post #10

Earlier quoted context omitted.

Yeah, it must be satire, or maybe someone straight out of uni and still waiting for the reality check.

Is the US government really that bad? I hear Americans complain about it all the time but from my experience in the UK the government is mostly competent most of the time.

In matters of finance the government gets it right eventually - but it can take its sweet time getting to that eventually.

Amusingly one of the “nicest” government arms to deal with is the IRS.

Re: I accidentally loaned all my money to the US government

#39

Post by laurencerowe »

hirako2000 wrote: post #34

Zero risk loan and guaranteed interest rate doesn't mean no risk the government won't default on repayments. If that happens, it is likely to get back the full capital + interest, but at that point in a currency worth initial capital - interest. Lending to a government is only safe when trust of that government is high. At the moment we are at a all time low since the 30s with regards to the US government treasury.

This is a loan to the currency issuer so it’s effectively the same risk as holding cash.

Re: I accidentally loaned all my money to the US government

#40

Post by bombcar »

sokoloff wrote: post #18
baal80spam wrote: post #7

8-10 _weeks_ for a refund?! Jesus Christ. I know that US banking system is something else but this is preposterous.

I don’t see any reason to think that most of that delay is in the banking system and have every reason to think the overwhelming majority of the delay is in the US government’s system.

Exactly - I suspect there are internal checks and procedures to prevent scams involving overpayment and immediate refund.

Or just as simple as “everything has to settle before we send a check” so you can’t use the US Treasury as part of a check cashing scam.

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