Hacker News Reader

Hacker News

Comment by Galanwe | Hacker News Reader

Parent Full thread

Galanwe

> I act as their investment agent, assigning realistic interest rates

Author then proceeds to put 15% annual interest rate...

View on HN

Where can I get 15% annualized returns, please?

(I'm told to no longer bet on even averaging 7% annually, over decades, on US stock indexes.)

15% yield would be a hell of an arbitrage opportunity if you could get a sensible loan to go along with that.

Commenter just discovered that there are other countries and economic realities outside the US/Europe

11% is a safe interest rate on my country (py), I just got a 14.5% offer for local bonds BBB+

stay vigilant Lebanon was granting 12% rates and everything was fine and “covered” by central bank until it wasnt

py = Paraguay, for those like me who didn't know

> 11% is a safe interest rate on my country

11% may be the safest bond you have access to, but that doesn't make it _safe_ in absolute terms.

up to 30k, cover 100% by the central bank

So, bonds basically all tend to converge on the same risk adjusted yield. If you're seeing yields that look like this, the market believes the currency will slip or there's repayment risk (relative to USD bonds that are in the 4.75% range.)

Imagine you have a scenario where inflation is 0 in currency A and 10% in currency B. Would you rather have a 2% bond in currency A or a 9% bond in currency B? This is why Euro bonds go negative sometimes, when USD interest rates were very low and the Euro was deflationary relative to the dollar, it could push rates even further lower.

Look, you do you, but rest assured that you don't get 11% for no reason.

I wrote an article (it's in Spanish) in which I took data from the central bank since 1990 and created a tool to simulate various scenarios. The tool includes a column showing the average interest rates on central bank-backed investments. Maybe you might find it interesting. https://roberdam.com/jubilar.html

the issue is your local currency will lose its value over time

Is there a (government-issued) currency that doesn't?

It's not an inherent feature, but they steer it in such a way so, no, there isn't (at least not for long), unless someone would make a good case for it at some point in the future

The interesting question would be what their currency, where this 11% is offered, typically loses year-on-year

Reply on news.ycombinator.com