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A comment on The real cause of the financial crisis -- An MIT Blackjack Team perspective. Parent comment

Re:The real cause of the financial crisis -- An MIT Blackjac... by gravitycop on Wednesday January 14, 2009 @01:13PM (#433953)
Annualized monthly CPI increases were over 18% for 6-month stretches? How about 5 years? There are 5-year CD's. From 1980 to 1985, the CPI went up only 30.6%. http://cost.jsc.nasa.gov/inflateCPI.html From 1989 to 1994, the CPI went up only 19.5%. From 2000 to 2004 (as late as that calculator goes), the CPI went up only 9.7%.

Right now, America, and the world, are experiencing deflation. Yet, 6-month CD's are paying over 2% interest.

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Re:The real cause of the financial crisis -- An MIT Blackjac... by kingkongrevenge on Wednesday January 14, 2009 @01:29PM (#433977)
A few quarters here and there with decent real CD rates is not reflective of how people actually go about saving. You have consistently lost purchasing power if you plowed cash into savings accounts, CDs, and money markets funds.

When all factors are considered, including understated CPI figures, I believe real returns to cash in the period in the 80s you point to were not even very good. Especially when you consider the opportunity cost of your five year CD and what played out in other asset classes during that five years.

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Re:The real cause of the financial crisis -- An MIT Blackjac... by gravitycop on Wednesday January 14, 2009 @01:46PM (#434006)
Especially when you consider the opportunity cost of your five year CD and what played out in other asset classes during that five years.

What other zero-risk asset classes were we comparing against?

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