9.62% APY is Huge!

This pandemic helped me leverage more savings and purchasing power than I had before it started. Concurrently, encouraged by consumer apps and r/wallstreetbets I checked out investing-- not that making money outside of wage slaving hadn't been enticing; rent, and bills, and shut-off notices took spending precedence. Looking at Oregon's economic projection and outcome post-pandemic makes this not just an anecdote, it supports the idea that putting money into people's pockets strengthens our economy better than paying out trillions to banks. Now if we could only get this circulated and address obscene runaway profits, wealth gaps, and the growing divergence of wages and production as people are ground into GDP we could start rebuilding our economy from the bottom up. 

 

To this end, while scrolling around Bloomberg I saw the headline, "There’s a Low-Risk Way for Investors to Earn 9.62% Returns Right Now", by Charlie Wells, and had to click (baited). Frist: cryptocurrencies are a market and need to be recognized as such. It cannot be held separate, as even Foreign Exchange of Currency is considered a Market, and cryptocurrency is at its most basic a currency. There's such value even the IRS is asking about it on Form 1040. . . but leaving tax season, and that 2nd payment behind us, we head on over to the Department of Treasury where Wells encourages us to invest in Series I Bonds. 

 

Who could say no to the King?
(Who ironically was critical of Capitalism and US Economic Policy until his assasination)

 

9.62% is a large return on investment, and US Government Bonds are some of the most stable investments due to their face and interest rate values. As mentioned, the website is rough around the edges triggering 'Is this site legitimate??' red flags. Truly though, TreasuryDirect IS the front-facing portal of our Treasury Department's bond sales, one of the main monetary levers of our Federal Reserve? The answer is, "Yes!" Don't let its lack of polish deter you– it also has a ‘.gov’ in its URL which is a good sign. 

US Bonds are secure because they’re banked on the value of our nation– and if our nation tanks we’ll have bigger issues than our investment portfolios to worry about. US Bonds also follow the Low Risk/Low Reward interest models, until I Bonds. I Bonds are tied to the Consumer Price Index (CPI) and were started about 20 years ago. As Glass-Steagall was rolled back and investment and consumer banks started colluding; the .com boom was enriching certain states, and the death knell of our manufacturing economy resonated into silence as we embraced an information/service economy. These bonds were a measure to help consumers' savings by offering a government bond that adapted to inflation-- which completely undermines the premise of the fixed, predictable, and secure nature of Government Bonds but I digress. 

 

What I truly wish Wells made more apparent, sooner, are those the conditions needed to get the payout: held for at least 1 year, and held for 5 years to get the full interest but that’s not as exciting as a 9.62% . . . which will also change in October since it's set semi-annually and our CPI should not be this cripplingly high by then or through next year.

As we worry about financial literacy and folks mismanaging money with what they can and can't afford, undermining the stability of government bonds, specifically leveraged by variable interest rates, can only lead to further destabilization and volatility in our economy setting us up for more crashes as happened in 2008.