The global economy is suffering from deleveraging, excess greed and twisted regulation. There have been few bright spots in the investment kingdom during this turmoil.  One bright spot has been the extended period of historically high interest rates paid on bank products.  Since the era of banking and finance destruction has begun around the middle of 2007, the interest rates being offered on bank certificates of deposits and money market accounts have been unusally high.  The horrnedous rates of return in commodities, stocks and real estate will normally drive investment dollars into fixed rate investments and subsequently bring down the rates on all fixed interest rate investment vehilces.  By taking a quick look at the short term and mid term Treasury securities it is apparent that these rates have in fact come down substantially during the era of Cro-Magnon CD rates.   The best CD rates far surpass those paid on comparable term Treasury securities.  There are numerous reasons or theories for the high rates being offered on bank CDs and money market accounts as opposed to the rates paid on money market mutual funds and Treasury securities, but I am not nearly smart enough to expound on these theories and actions.

The fundamental question for the future of CD rate investing will be for how long can these high CD rates continue?  As more investors pull their money out of the stock, coomodity and real estate markets, it seems likely that deposits bank are so eagerly chasing will eventually come to an end.  Once this level of satisafaction in depoist growth is reached it is possible that the CD rates will once again head down.  Of course, the prospect of rising inflation caused by the government attempt to finance the plethora of new programs may in fact force banks to continue to offer CD rates and money market rates at leverls that keep their customers happy.  Who said Cro-Magnon was extinct.

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