Wise Owl

What's So Puzzling About TIPS?

A trusted money manager had recommended buying tips several years ago. And, I bought them reluctantly. My viewpoint has been that we are living in deflationary times, on a global basis. And, actually we are seeing both inflationary and deflationary cycles at the same time.

US living standards should go down due to our inability to sell to other countries who export to us. But, we provide the critical markets for their goods ( Chinese Clothes, goods, Indian software skills, Saudi's Petrochemical Exports, capital markets for extra dollars etc.etc. while we consume these items and somehow pay for it through credit that is used to pay interest on the treasury bonds. We are all interdependent economies creating and consuming and providing credit markets, capital markets etc. etc.

It does not make sense, but TIPS are doing better than AGG's why. Because inflation in living costs are here, except, it is not being measured by CPI... It is in good food costs, increased travel costs etc. for a person who pays for these bonds on a preferential basis....

I hope this makes sense.

Wiseowltx