We’ve also been thinking that we need a comprehensive assessment of bond returns, and yes, that will need to take into account their probability of default. Speaking to US bonds in particular, apparently, the Treasury did default on some of its bills in 1979 due to ‘technical errors,’ and a few times, the US changed the terms of its obligations post facto. (Others dispute this characterization.) But either way, the fact that these events are really rare is reflected in bonds’ relatively low yield, compared to, e.g. the S&P.
Our general plan for security is to open source everything and hire auditors to take a close look. We’ll have more to say on this when we launch.
That does help a lot to know that the risk has been very low but does exist. Open source for security sounds like a good idea, but I’m non-technical so I might be wrong. At least the transparency of that is something that I value a lot.
I’d still be interested to know if you would only invest in US bonds. With China likely eclipsing the US in our lifetime, and these things not always going down without a literal fight, that might make US bonds more risky than the market currently thinks, meriting a more diverse bond backing.
Absolutely, on my short-term agenda is a research piece comparing the returns to different countries’ historical bond returns. I’m thinking of limiting it to just OECD countries (or some other criteria of developed-ness?), and that would also function as a basis for figuring out which countries’ bonds would be a good bet.
👋
We’ve also been thinking that we need a comprehensive assessment of bond returns, and yes, that will need to take into account their probability of default. Speaking to US bonds in particular, apparently, the Treasury did default on some of its bills in 1979 due to ‘technical errors,’ and a few times, the US changed the terms of its obligations post facto. (Others dispute this characterization.) But either way, the fact that these events are really rare is reflected in bonds’ relatively low yield, compared to, e.g. the S&P.
Our general plan for security is to open source everything and hire auditors to take a close look. We’ll have more to say on this when we launch.
Hope that helps!
That does help a lot to know that the risk has been very low but does exist. Open source for security sounds like a good idea, but I’m non-technical so I might be wrong. At least the transparency of that is something that I value a lot.
I’d still be interested to know if you would only invest in US bonds. With China likely eclipsing the US in our lifetime, and these things not always going down without a literal fight, that might make US bonds more risky than the market currently thinks, meriting a more diverse bond backing.
Absolutely, on my short-term agenda is a research piece comparing the returns to different countries’ historical bond returns. I’m thinking of limiting it to just OECD countries (or some other criteria of developed-ness?), and that would also function as a basis for figuring out which countries’ bonds would be a good bet.