Treasury Bills Ain't What They Used To Be

For the last year or so I've bought Treasury Bills with my house savings while waiting for the housing bubble to pop. If you've never bought T-Bills, they sell them at a discount off the face value and you have to calculate the interest on the T-Bill after the auction. For a while they were paying around 5%, which is State tax free. At the last auction for 4 week bills, I barely got over 3.5%. That's no better than those rip-off i-bonds are paying. Inflation protected my foot.

I changed the name of this blog today from "Saving Money" to "Losing Money To Inflation". My main goal in saving money has been to buy a house, and the housing market is finally coming down. The problem is, the value of the dollar is dropping faster than the cost of housing. The Fed is doing their best to pump up the bubble which may just last until the Baby Boomer retirees start collecting Social Security in earnest around four or five years from now. At that moment, Social Security is broke, because the Trust Fund consists of Treasury Bonds which have to be paid by, you guessed it, the U.S. taxpayer.

So, there's a race to the bottom going on between the down payment for a house I have saved in T-Bills and the cost of housing, which of course the State and Federal governments are tying to keep inflated so people will borrow and spend more. I figure real inflation has been around 6% a year for the last six years, or my savings from 2001, after interest accrued and taxes paid, are worth about 75% of what they were then. I'm just thankful I didn't have any money to speak of six years ago:-)