hastalavista
Elite Member
- Joined
- May 16, 2005
- Professional Status
- Certified General Appraiser
- State
- California
Terrel-
I was thinking about this same question the other day. Perhaps some of the pros can point me in the right direction:
Isn't inflation an implied part of the the safe rate (T-Bill)? Yet almost every commentator I watch on the various financial programs say that when accounting for inflation, returns are near zero if not net-negative. When the FED is artificially driving rates low by purchasing the notes or when Treasuries become the default flight to safety due to Euro turmoil, etc., it seems to me the inflation hedge is wiped out and the T-Bill really is just a holding place for the money during stormy times. Its rate of return is certainly "safe" (at least, until December 31st :laugh
, but it does not adequately account for inflation.
So, my question is: Should the safe rate also account for inflation? Or, if it does not, should that consideration be added to the "risk rate"?
I was thinking about this same question the other day. Perhaps some of the pros can point me in the right direction:
Isn't inflation an implied part of the the safe rate (T-Bill)? Yet almost every commentator I watch on the various financial programs say that when accounting for inflation, returns are near zero if not net-negative. When the FED is artificially driving rates low by purchasing the notes or when Treasuries become the default flight to safety due to Euro turmoil, etc., it seems to me the inflation hedge is wiped out and the T-Bill really is just a holding place for the money during stormy times. Its rate of return is certainly "safe" (at least, until December 31st :laugh
, but it does not adequately account for inflation.So, my question is: Should the safe rate also account for inflation? Or, if it does not, should that consideration be added to the "risk rate"?
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