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Wall Street Journal says US Treasury bonds are ‘safe.’ By what definition?

Posted by John Reed on

WSJ headline today: “Flight to Safety Benefits Treasurys.”
By what definition of “safety” are US government bonds (Treasurys) safe?
1. They were safe in the 1930s. WSJ cannot afford to buy a more recent dictionary?
2. S&P downgraded the credit rating of the US in 2011 and still has never raised it. “Standard & Poor's credit rating for the United States stands at AA+ with stable outlook.” All the rating agencies should have lowered that rating farther than that. They did not because the DOJ tried to bankrupt S&P when they dared lower it.
3. Treasury bonds pay fixed interest rates—2.76% at present on 10-year bonds—when inflation is 8.3%. That means your purchasing power in that bond is falling 2.76% - 8.3% = -5.54%.
When talking about bonds, the word “safety” has absolutely no meaning to the WSJ.

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