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Watch your cash. Negative yields are here.

MsMorrisineMsMorrisine Posts: 23,598 ✭✭✭✭✭
edited March 26, 2020 2:00PM in Precious Metals

I just saw on CNBC that the yield on the 1 month and 3month tbills went negative.

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Comments

  • derrybderryb Posts: 28,394 ✭✭✭✭✭

    my money markets are all paying greater than 1%. I don't see them ever going negative, at least until the banks don't need my money to make bad loans.

    Money relies on its credibility with the people who are its users. And once that credibility is destroyed the currency is destroyed with it.

  • cohodkcohodk Posts: 16,117 ✭✭✭✭✭

    Yup...3 month went to -0.02%

    1 month is at 0.01%

    Money markets are usually 1-3 month tbills, so derryb, your money market will go to close to 0%.

    Only a year ago we were at 2.4% on 3 month. And things were good. Why didnt "they" listen to me.


    Excuses are tools of the ignorant
    Knowledge is the enemy of fear
  • MsMorrisineMsMorrisine Posts: 23,598 ✭✭✭✭✭

    They?

    Current maintainer of Stone's Master List of Favorite Websites // My BST transactions
  • cohodkcohodk Posts: 16,117 ✭✭✭✭✭

    Yes, they. That amorphous collective that is out to get "us".

    Lol


    Excuses are tools of the ignorant
    Knowledge is the enemy of fear
  • HigashiyamaHigashiyama Posts: 1,363 ✭✭✭
    edited March 26, 2020 3:17PM

    So ... high quality short term bond funds (eg, avg maturity about 2 years) are yielding roughly 1 %. Is it worth the risk?

    Higashiyama
  • cohodkcohodk Posts: 16,117 ✭✭✭✭✭

    @Higashiyama said:
    So ... high quality short term bond funds (eg, avg maturity about 2 years) are yielding roughly 1 %. Is it worth the risk?

    Nope...so fish from the other side of the boat.


    Excuses are tools of the ignorant
    Knowledge is the enemy of fear
  • blitzdudeblitzdude Posts: 2,375 ✭✭✭✭✭

    Chicken eggs are king, Gather on!

  • davidkdavidk Posts: 238 ✭✭✭

    I don’t understand why some CDs are still paying almost 2%. I even picked up a few, not that long ago, for 3.4-3.5%.

  • cohodkcohodk Posts: 16,117 ✭✭✭✭✭

    @davidk said:
    I don’t understand why some CDs are still paying almost 2%. I even picked up a few, not that long ago, for 3.4-3.5%.

    That rate was common in Dec 2018.


    Excuses are tools of the ignorant
    Knowledge is the enemy of fear
  • derrybderryb Posts: 28,394 ✭✭✭✭✭

    @davidk said:
    I don’t understand why some CDs are still paying almost 2%. I even picked up a few, not that long ago, for 3.4-3.5%.

    CD rates will be coming down as soon as the bank can get it from the FED cheaper.

    CD pays higher rates than other bank services because the money is tied up. It's theirs until maturity. Money market can be closed at any time.

    Money relies on its credibility with the people who are its users. And once that credibility is destroyed the currency is destroyed with it.

  • derrybderryb Posts: 28,394 ✭✭✭✭✭
    edited March 26, 2020 7:30PM

    When they see the need to tell you not to worry it's time to worry:

    The FDIC insurance fund is less than $100 billion. In 2015 US banks held over $10 Trillion in deposits. Doesn't take a mathematician to understand that the FDIC, while capable of covering the small bank failure here and there, exists primarily to provide a false sense of security. Don't worry, they've got your back.

    Money relies on its credibility with the people who are its users. And once that credibility is destroyed the currency is destroyed with it.

  • derrybderryb Posts: 28,394 ✭✭✭✭✭
    edited March 26, 2020 9:16PM

    do not confuse negative yields on bonds with negative yield on bank interest rates. Bonds are going negative because investors who are flush with cash are choosing their safety over what they consider risky banks. They are more concerned with safety than they are with returns.

    Money relies on its credibility with the people who are its users. And once that credibility is destroyed the currency is destroyed with it.

  • cohodkcohodk Posts: 16,117 ✭✭✭✭✭

    @derryb said:
    When they see the need to tell you not to worry it's time to worry:

    The FDIC insurance fund is less than $100 billion. In 2015 US banks held over $10 Trillion in deposits. Doesn't take a mathematician to understand that the FDIC, while capable of covering the small bank failure here and there, exists primarily to provide a false sense of security. Don't worry, they've got your back.

    The FDIC has an unlimited line of credit with Congress. There are no worries on this matter.


    Excuses are tools of the ignorant
    Knowledge is the enemy of fear
  • derrybderryb Posts: 28,394 ✭✭✭✭✭

    unlimited line of credit with Congress? More of that Magic Money Tree? LOL

    Sorry, but there is a limit to reality.

    Money relies on its credibility with the people who are its users. And once that credibility is destroyed the currency is destroyed with it.

  • MsMorrisineMsMorrisine Posts: 23,598 ✭✭✭✭✭

    money markets buy treasuries

    Current maintainer of Stone's Master List of Favorite Websites // My BST transactions
  • jmski52jmski52 Posts: 20,226 ✭✭✭✭✭

    Debt and the boiling frog analogy comes to mind. I'm sorry for the younger generations. End the Fed.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • SmudgeSmudge Posts: 5,081 ✭✭✭✭✭

    @jmski52 said:
    Debt and the boiling frog analogy comes to mind. I'm sorry for the younger generations. End the Fed.

    Or frog in the blender.

  • rickoricko Posts: 72,641 ✭✭✭✭✭

    Wow... those poor frogs...they take all the punishment :D Boiling, blending and crossing the road - oh wait, I think that was chickens...but frogs cross the road too.... ;) What a mess....Cheers, RickO

  • BAJJERFANBAJJERFAN Posts: 30,041 ✭✭✭✭✭

    @ricko said:
    Wow... those poor frogs...they take all the punishment :D Boiling, blending and crossing the road - oh wait, I think that was chickens...but frogs cross the road too.... ;) What a mess....Cheers, RickO

    I remember one time there were so many frogs on the road that you could hear pop pop pop as you ran over them.

  • dpooledpoole Posts: 5,455 ✭✭✭✭✭

    Print lotsa money...dump it out of helicopters...no inflation!

    Are these good times, or what?!

  • metalmeistermetalmeister Posts: 3,986 ✭✭✭✭✭

    My 3% 1 Yr. CD's came due and are now 1.25% and money is falling from the sky. Strange days.

    email: [email protected]

    100% Positive BST transactions
  • cohodkcohodk Posts: 16,117 ✭✭✭✭✭

    .


    Excuses are tools of the ignorant
    Knowledge is the enemy of fear
  • WWWWWW Posts: 2,622 ✭✭✭

    Cash is the king, inflation is the queen and gold is the consort. Sounds like a royal flush.

  • derrybderryb Posts: 28,394 ✭✭✭✭✭

    the helicopters bring price inflation. They put the money directly in the consumers' hands. More dollars competing for the same amount of goods and services = higher prices.

    Money relies on its credibility with the people who are its users. And once that credibility is destroyed the currency is destroyed with it.

  • 3stars3stars Posts: 1,056 ✭✭✭✭

    @ricko said:
    Wow... those poor frogs...they take all the punishment :D Boiling, blending and crossing the road - oh wait, I think that was chickens...but frogs cross the road too.... ;) What a mess....Cheers, RickO

    Try being named Pete- always being robbed by Paul, having things done for your sake, having a principle for getting promoted ahead of your skills.

    Previous transactions: Wondercoin, goldman86
  • rickoricko Posts: 72,641 ✭✭✭✭✭

    @3stars .... Let me add to that one.... :D Cheers, RickO
    Friends may come and friends may go...
    and friends may peter out you know,
    But we'll be friends through thick and thin,
    Peter out or Peter in.

  • metalmeistermetalmeister Posts: 3,986 ✭✭✭✭✭

    I noticed food prices going up. Paper products wayyyyy up. Hope this is temporary. But I am not so sure.

    email: [email protected]

    100% Positive BST transactions
  • jmski52jmski52 Posts: 20,226 ✭✭✭✭✭

    I always liked Pistol Pete Maravich. I still watch some of the videos to watch him play. Awesome basketball player.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • 1630Boston1630Boston Posts: 6,909 ✭✭✭✭✭

    "Pistol Pete" Maravich's Greatest NBA Game Ever! 68 Points vs Knicks!

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  • MeshMesh Posts: 83 ✭✭✭

    @cohodk said:

    @derryb said:
    When they see the need to tell you not to worry it's time to worry:

    The FDIC insurance fund is less than $100 billion. In 2015 US banks held over $10 Trillion in deposits. Doesn't take a mathematician to understand that the FDIC, while capable of covering the small bank failure here and there, exists primarily to provide a false sense of security. Don't worry, they've got your back.

    The FDIC has an unlimited line of credit with Congress. There are no worries on this matter.

    she's from eastern europe ?

  • derrybderryb Posts: 28,394 ✭✭✭✭✭
    edited March 31, 2020 11:13AM

    @Mesh said:

    @cohodk said:

    @derryb said:
    When they see the need to tell you not to worry it's time to worry:

    The FDIC insurance fund is less than $100 billion. In 2015 US banks held over $10 Trillion in deposits. Doesn't take a mathematician to understand that the FDIC, while capable of covering the small bank failure here and there, exists primarily to provide a false sense of security. Don't worry, they've got your back.

    The FDIC has an unlimited line of credit with Congress. There are no worries on this matter.

    she's from eastern europe ?

    She's CoHo's insurance agent.

    If you listen closely, she's telling you there is a panic for cash.

    Money relies on its credibility with the people who are its users. And once that credibility is destroyed the currency is destroyed with it.

  • HigashiyamaHigashiyama Posts: 1,363 ✭✭✭

    Does anyone on this board believe there is a material risk of losing (nominal) money in an FDIC insured account?

    Higashiyama
  • derrybderryb Posts: 28,394 ✭✭✭✭✭
    edited March 31, 2020 10:01AM

    @Higashiyama said:
    Does anyone on this board believe there is a material risk of losing (nominal) money in an FDIC insured account?

    There is great risk if there is ever a run on the banks or the failure of one or two major banks. The fact that the FDIC chose to release their "video of reassurance" on March 24, tells me they saw an increase of risk, most likely on a bank run.

    FDIC insurance is a publicity stunt to hide the fact that banks are very heavily over leveraged thanks to fractional banking. It is false reassurance that you should never worry about the same banks that brought us to the edge of the cliff in the last crisis. What do you think would happen if everyone realized that only 10% of their money was actually being held by the bank? The FDIC stunt is designed to make that question appear to be irrelevant.

    Banks are allowed to loan out 90% of YOUR deposits. Think about what that means in terms of "cash on hand" if enough people show up wanting 100% of their deposits. I refuse to drink the kool-aid on this one, as it could easily become a game of musical chairs where there is only one chair for ten account holders (assuming they all have the same in deposits). Bank runs can occur as swiftly as shortages of toilet paper.

    Since the great bail-out of banks in 08-09 by taxpayers, changes were made to make creditors (account holders/DEPOSITORS) take the hit to rescue the bank with a "bail-in."

    Lessons from Cyprus.

    Money relies on its credibility with the people who are its users. And once that credibility is destroyed the currency is destroyed with it.

  • BAJJERFANBAJJERFAN Posts: 30,041 ✭✭✭✭✭

    So when are these negative rates taking effect?

  • MsMorrisineMsMorrisine Posts: 23,598 ✭✭✭✭✭

    who knows.

    I haven't seen the 1 month and 3 month yields on cnbc for days. i imagine that is because they are positive again.

    the real threat of lower to negative rates is on money market funds.

    Current maintainer of Stone's Master List of Favorite Websites // My BST transactions
  • BAJJERFANBAJJERFAN Posts: 30,041 ✭✭✭✭✭
    edited April 1, 2020 4:25PM

    My money market interest in an IRA posted today with about half of the previous month's interest payments.

  • thefinnthefinn Posts: 1,466 ✭✭✭✭✭

    @derryb said:
    my money markets are all paying greater than 1%. I don't see them ever going negative, at least until the banks don't need my money to make bad loans.

    With the increase in the inflation rate, you are officially in the red.

    thefinn
  • cohodkcohodk Posts: 16,117 ✭✭✭✭✭

    1 month is 0.03 and 3 month is 0.09.


    Excuses are tools of the ignorant
    Knowledge is the enemy of fear
  • meluaufeetmeluaufeet Posts: 559 ✭✭✭

    In my 401k account, they are no longer allowing new money into the MM. But they do offer a managed 1$ fund that has 0.2% annual fee.

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