Thursday, July 16, 2009

I-Bond "fixed" rate

All those years ago I thought it a good idea to buy bi-weekly bonds. I-Bonds seemed a good choice because it had a great return (that, I think, actually beat most of our other savings over the same period). I was comforted that the overall rate was comprised of the fixed + the inflation-adjusted rate - so even if it adjusted in a way not in my favor, it'd still beat a passbook account.

Fast forward to now, and a deflationary period and I learn, embarrassingly late, that Uncle Sam actually had a different, slightly more nuanced, definition of "fixed rate" (emphasis mine).

The fixed rate will always be greater than or equal to 0.00%. However, the fixed rate is not a guaranteed minimum rate; the composite rate could possibly be less than the fixed rate in deflationary situations.
So, it's fixed, kinda, but if the economy tanks, they let the "adjusted" component of the rate eat away the supposed "fixed" component, making it - by my lowly definition - not so fixed after all. I suspect I'm not alone in learning this nuance, as this is apparently the first deflationary period every experienced since the inception of the I-Bond.

Equally unsettling is that the rate *could* conceivable be pushed below 0.0% such that it actually eats away at any interest earned over the period too! So I should in fact be grateful that Uncle Sam has provided such a great regulation that in the words of my helpful customer service rep...
... regulations allow us to adjust the composite rate [back up] to 0% to prevent the investor from losing any interest earned.
... that's good... I guess... but with these terms, I think I'll look for other avenues and leave financing our national debt to the Chinese.

Tuesday, July 14, 2009

Sick Food

Some incredibly enlightening testimony on the use of antibiotics in livestock.  Everyone should invest in the hours to hear this testimony.   Some highlights,

" classes of antibiotics considered crucial by the FDA are used as normal feed additives for chicken, cattle, and pork..."

"... 70% of human-use antibiotics are given to animals..."

Alarmed?  No?  Let's look deeper...

"Especially troubling is their use not to cure sick animals but to promote "feed efficiency," that is, to increase the animal's weight gain per unit of feed. "... according to the Union of Concerned Scientist.

"Agricultural use, much of it for growth promotion, accounts for 40 percent of the antibiotics sold in the United States. " 
For related reasons, if you haven't already, you should watch King Corn which will give a good clue as to why the cattle need all those antibiotics (hint: cows don't digest corn well even though our tax dollars subsidize it as feed).