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A comment on Joint Statement by the Department of the Treasury, Federal Reserve, and FDIC. Parent comment

Re:Joint Statement by the Department of the Treasury, Federa... by mcv on Monday March 13, 2023 @06:08AM (#35133536)
> risk-free investment

That's what I don't get. Why are bonds considered risk free if their value can drop when interest rates go up? Sure, they may be worth $1200 in 10 years, but they're only worth $835 now, when they were worth $1000 yesterday.

Risk may be lower than buying shares in a company at risk of bankruptcy, but it's hardly risk free. These things can go up and down just like normal share prices.

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Re:Joint Statement by the Department of the Treasury, Federa... by jkhdigital on Monday March 13, 2023 @07:23AM (#35134153)
There’s no default risk, that’s all. “Risk-free” only refers to the risk of default. Every (fixed-rate) debt instrument has unavoidable interest rate risk. And the floating rate ones are just transmuting it into default risk.
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Re:Joint Statement by the Department of the Treasury, Federa... by xmcqdpt2 on Monday March 13, 2023 @07:28AM (#35134189)
You are correct, these are two different kind of risks. The "risk-free" rate refers to counterparty risk (which should be zero when the counterparty has the money printer, or can be bailed out by the money printer.)
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