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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Henry Volquardsen who wrote (68391)	9/30/1999 10:46:00 AM
From: Freedom Fighter	Read Replies (2) \| Respond to of 132070

Henry, >>>They are also a very cynical group when it comes to government statistics like the CPI. So they may not trust the apparent real returns on bonds. bills etc...<<<< >I'm pretty cynical about government as well and have a natural distrust of their statistics. What I do trust is free markets and price action.< I'm not a bond investor so I don't understand all the issues. But If I was, I would need some inflation barometer to help me determine whether yields were compensating me or not. If the CPI and other related statistics are off, it would be a big problem for me. Perhaps even for the market. If the inflation rate is actually higher than reported, then after tax and inflation returns vanish because the inflation portion of the interest rate is taxed too. We have had negative after tax and inflation rates at times even on the reported statistics. I think that it is assumed that the inflation portion of the interest rate will be captured by the price of gold over the very long haul. The credit, time preference, and other risk portions of the interest rate are generally not captured because citizens generally don't lend their gold. Theoretically I suppose they could though. Then I believe gold holders would not be sacrificing that portion of the bond interest that is related to credit risk, time preference etc... Really though, its just time preference because I doubt there's too much credit risk assigned to treasuries. There's some sort of trade off going on for gold holders. I believe they have a much longer investment perspective. Wayne