Dr. Housing Bubble 05/04/09

[Crewleader]

The Paradox of Spendthrifts - Government Offering 0 Percent on I Savings Bonds and Creating Incentives to Spend. Punishing the Prudent and Savers. $115 Trillion in total U.S. Debt.

It is fascinating to witness policies enacted that punish the prudent and those who have been financially responsible. I have been a fan of I Savings Bonds from the U.S. Treasury since they came out in 1998. For those of you who do not know what an I Savings Bond is, it is a saving vehicle composed of a fixed rate and a rate that is indexed to the CPI. They are marketed as low-risk and liquid savings products. The lowest return you will ever receive on I Savings Bonds is 0 percent. This would only occur if the CPI rate turned negative. For the first time in 11 years, the I Savings Bond rate is 0 percent.

I want to focus on the I Bond because this product highlights many problems that we are currently experiencing in our economy. First, let us look at the fixed rate component of the product:



The only time the fixed rate part of this product has trended upward was in the late part of the 1990s when the technology bubble was raging. But after 2000, the fixed rate component of this product has followed a strong trend to zero. The rate did hit zero in May of 2008. Currently the fixed rate stands at 0.10%.

If the zero percent fixed rate isn’t enough to keep you away, the limit on how much of this product you can buy in a calendar year was also dropped in May of 2008 (it used to be $30,000):

http://www.doctorhousingbubble.com/the-paradox-of-spendthrifts-government-offering-0-percent-on-i-savings-bonds-and-creating-incentives-to-spend-punishing-the-prudent-and-savers-115-trillion-in-total-us-debt/

[Double T]

1. Now that the financial crisis and the greatest depression have ended..........

it's green shoots, flowers, sunshine and happy days again! And if YOU believe that HappyHS, I've got some I 'savings' bonds I'd like to sell YOU. :evilgrin:



Albert Einstein was smarter than that.

[Crewleader]

2. Hi Double T...

you my friend are good for the soul! :evilgrin:

[ixion]

3. and what a load of HappyHS it is

I'm amazed at the class (and robust) denial we're experiencing collectively here. The MSM calling the bottom, consumers say they're more positive, and the stock market reflecting this delusional state. Classic.

No one seems alarmed by the fact that we're spending trillions we don't have on solutions that won't work. Bankers are being rewarded, rather than prosecuted -- just like BushCo, who are all free and out raising millions, while the world looks on in disgust.

Collectively speaking, we've lost out minds. Not all at once. We've been devolving for some time. It just finally reached the tipping point.

And now, the infrastructure slowly crumbles, and people ignore the tsunami blacking out the sun in the distance. Kunstler wrote an excellent piece on this topic:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x64305