SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Pastimes : The Naked Truth - Big Kahuna a Myth
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: IceShark who wrote (69799)10/18/1999 10:00:00 PM
From: Defrocked  Read Replies (2) of 86076
 
Ice, the real rate usually deals with
longer term borrowing and consumption tradeoffs
and is normally associated with notes or bonds
but not short-term bills. Your 2 to 3%
number is in the ballpark for note or
bonds. The vaguaries of measurement for
expectations make T-bills somewhat different.
Recall that the real rate equals the difference
between nominal yields and inflationary
expectations. It is not the difference
between nominal yields and the most recent
CPI number which is a (currently disputed)
measure of previous months' inflation.

I vaguely recall some econometric studies of
high inflationary periods such as in the US
in the later '70's and Brazil or Argentina
where the Tbill rate was employed as an
reliable indicator of inflation since the
standard measurement procedures lagged
expectations too much.(Tough to make money on
some of those studies<g>)

I believe that today's real rate is not as high
as some economists that use past CPI as an
expectation proxy believe. The bond markets are very
efficient discounters of inflation and the
current bill rates above 5% probably reflect
higher inflation and credit demand than a
high real rate implied by the CPI proxy
procedure would. BIOG.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News