Most Reckless Fed Ever: “Real” Federal Funds Rate Now the Most Negative Ever

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Most Reckless Fed Ever: “Real” Federal Funds Rate Now the Most Negative Ever

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The “real” interest rate on savings accounts and CDs is similarly negative in the -7.0% range. The real yield of short-term Treasury bills is similarly negative in the -7.0% range. Even the 10-year Treasury yield, now at 1.7%, is -5.3% in real terms.

Even most junk bonds are traded with yields below the rate of inflation. The average BB-rated “real” junk bond yield is -3.3%. Taking more risk, the average B-rated “real” yield is -2.0%.

You have to go to CCC-rated junk bonds – “substantial risk” of default – to get a yield above the rate of CPI inflation. Here’s my cheat sheet for corporate bond credit ratings, and you can see how far down you have to go and how much risk you have to take to beat inflation.
 
Interesting that its been essentially negative since 2003 and there was no blatant inflation (except for Oil) until now.

I remember reading depression porn in 2008 (aka ZeroHedge) that intimated Bernanke was going to throw money from Helicopters (hence the derision of Helicopter Ben) to finally end the deflation since the 2000 crash.

Looks like ZeroHedge was right except it wasn't the central bankers it was the GOP & Congress throwing free money to the masses.

You can draw straight line from 1982 to 2021 and it goes from 3% to -7%. Looks like in a few more years it will be -11%.
 
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