Thursday, April 2, 2009
Interest rates - 1930s or 1970s?
One chart, one message: we're replaying the 1930s, not the 1970s. This is a long-term chart of short-term (3-6 month) U.S. Treasury Bond (i.e. T-Bill) yields from 1920 to 2008. Chart copied from thechartstore.com (good site for historical chart data if you're interested) and doodled on to give it a smidge of originality:
Deflation investments when trying to play the bullish side and/or maintain capital are limited: gold (and other safe cash equivalents such as short-term U.S. Federal government debt [i.e. T-bills] or cash under the mattress) to maintain capital and gold miners to make money from the long side. Everything else is toast and should either be shorted or avoided.
Investing with a longer-term time horizon of 2-4 years is easy in a deflationary crash, so don't hate, celebrate!