All Commentary
Tuesday, October 26, 2010

Inflation Fears Spur Bond Sales


“At a time when savers complain that they are earning almost no interest from their bank accounts, some investors on Monday bought United States government bonds that effectively had a negative rate of return. Bizarre as it sounds, that is correct. In an auction of a special kind of five-year Treasury bond, investors paid $105.50 for every $100 of bonds the government sold — agreeing to pay the government for the privilege of lending it money. The reason is that these types of bonds offer a guaranteed protection against inflation.” (New York Times)

Inflation isn’t what it used to be.

FEE Timely Classic
“Government’s Diminishing Benefits from Inflation” by Jeffrey Rogers Hummel