The Tesla Protocol, Boeing, and the regression to the minimum viable product

One of the most striking stories I’ve heard about Tesla vehicles had nothing to do with exploding cars, drowning shipping magnates, or spontaneous highway shutdowns. It was a simple tweet from a Tesla enthusiast and Elon Musk fan praising the third vehicle they’d been sent from the factory for having the “fewest defects so far,” and deciding to keep the car.

The context is that when you order a Tesla (at least back then), it shows up at your door a few months later and you have to decide whether to accept it or not. If you don’t accept it, you go back on the list and have to wait another few months for them to send you another one, when the process is repeated.

What made the tweet so memorable is the inversion of what I grew up considering the “normal” American shopping experience, and the mirroring of typical descriptions of the Soviet shopping experience. I’m a bit too young to have experienced Soviet shopping for myself, but the potted story handed down to students today is that goods in the Soviet Union were stamped with the date they were produced. Goods made at the beginning of the month could be expected to more or less meet the product standards, since at the beginning of the month factories had all the necessary materials and workers. As those ran out over the course of the month, factories relied more and more on improvised and makeshift replacements, so by the end of the month goods hardly worked and had to be put into working order by the customers themselves.

The minimum viable product

What our financier overlords call the “minimum viable product" is the earliest stage of a product that some consumer, somewhere, is willing to buy. The original iPhone is a classic example, in that it didn’t work very well for anything, but it turned on, you could check your e-mail if you were patient, browse text on the internet if you were very patient, and even make phone calls. The fact people were willing to pay money for such a tenuously-useful product gave Apple the information they needed to invest in the product line and give us the slightly-better-functioning smartphones we enjoy today.

The early Tesla models seemed to share this pattern: they turned on, they charged, they got you to work most days, and people were willing to pay money for them, giving Tesla the information they needed to raise more money and invest in additional electric vehicle lines.

The immiseration of the consumertariat

Marxist economics describes a process under capitalism known as the “tendency of the rate of profit to fall.” This is often confused with an empirical claim that the rate of profit is falling, but this is just a misunderstanding. The rate of profit can stay steady or rise under capitalism, as long as the tendency to fall is counteracted in some way.

One standard Marxist explanation for how the tendency is counteracted is through the intensification of labor. By intensifying the labor performed by workers (longer hours, lower wages, more erratic scheduling), more surplus value (value added by workers above and beyond that required for their own maintenance and reproduction) can be extracted per worker, which can offset or more than offset the underlying tendency.

The tendency of the rate of profit to fall is experienced most viscerally by capitalists and workers, because it is their respective jobs to fight for and against the intensification of labor. But both capitalists and workers of course have another role in the economy, which is as consumers, and it is also experienced there in what I call the immiseration of the consumertariat.

The regression to the minimum viable product

Remember our story about the iPhone, where early adopters of an admittedly crappy product paved the way for the cheaper, slightly-less-crappy products that are in wide use today. But finance capital is indifferent to both product quality and popularity: instead of using early consumer interest to improve products and services over time, the consumer product or experience can just as easily be made worse, as long as the cost savings exceed the lost in revenue.

The result of this process is a tendency to regress to the minimum viable product. That minimum product is different in different industries, of course, and is highest not where consumers are pickiest but where regulation is strictest. Gasoline, for example, is a consumer product that is so strictly regulated no one thinks twice about buying it from an unfamiliar station in a location far from home, and consequently the measures taken to combat the tendency are primarily taken out against workers in the trucking and retail sides of the industry rather than against consumers themselves.

Boeing’s past decade of aviation disasters illustrates the horrifying consequence of misjudging where the minimum viable product is. The developed world had allowed itself to be convinced that aircraft were as tightly regulated as gasoline, when they turned out to be as tightly regulated as electric cars.

Workers have an obvious role to play in countering this tendency through labor militancy. A good illustration comes from right here in Washington, DC: the housekeepers union at the Washington Hilton fought to bring back a daily housekeeping policy. Note that the housekeepers do not claim to be “protecting consumers” or anything like that. They’re protecting their members’ income by ensuring that as many housekeepers are scheduled to work as necessary to clean every occupied room every day. But as a mechanical consequence of that, customers experience more frequent and more thorough cleanings.

Making housekeeping a dignified job is not and should not be free. The higher quality customer experience will come from some combination of lower profits for finance capital and shareholders and higher prices for customers.

The duty to complain

Customers also have a role to play here that I call the duty to complain. Customers have a lot of power not because they’re the source of businesses’ income, but because they can make it expensive to cut costs.

The cliche people joke about online is the self-checkout machines where all your produce can be turned into iceberg lettuce with the push of a button, but you don’t need to steal from grocery stores to fight the regression to the minimum.

There was an affiliate blogger who got a bad reputation for finding everything wrong with every plane he got on in order to get miles in compensation for his inconvenience, but for all I dislike about them, I find no fault in this behavior. By making it expensive (or at least not cost-free) to shirk routine maintenance, they were unwittingly doing their part to counter the tendency to employ as few mechanics as possible and let the state of the fleet deteriorate back to the minimum viable product.

The duty to complain should be distinguished from mere nostalgia. I’ve heard the story about the olives in the airline salad countless times, but if you like olives in your salad that much I’d suggest bringing some from home rather than complaining to your flight attendant. If your seat doesn’t recline, on the other hand, then alerting the flight attendant and having it recorded for repair is a duty: one-off maintenance is expensive, and the more of it airlines are forced to do, the less cost savings they’ll realize by cutting routine maintenance.

Conclusion

I also want to be careful to distinguish what I’m describing from the consumerist, neoliberal exhortation to “vote with your dollar.”

Most people do not have the luxury of choosing between multiple internet providers or going without internet, but the more people complain to Comcast the more expensive it is to offer unacceptable service.

Most people don’t have more than one or two airlines to choose from on most of their trips, but by insisting on the maximum compensation for delays, lost bags, and faulty equipment, they can make it as expensive as possible to badly run the airline they’re forced to fly.

And, obviously, there’s a difference between complaining and being rude. The point of complaining is to impose costs on the owners and managers of businesses for mismanagement, not to make miserable the workers doing trying to implement those policies.

Manufacturing transactions is harder than you think

There are countless methods of manufacturing credit card spend, but the basic principles are simple: generate a credit card purchase (usually at some cost), liquidate the purchase back to cash (usually at some cost), and use the cash (plus any costs paid) to pay off the credit card balance. If you generate more in credit card rewards than you pay in costs, the technique is profitable.

In some cases these techniques are still profitable to the banks and merchants, and in others they’re unprofitable but travel hackers are too small a share of customers to be worth completely rooting out, so only half-hearted and incomplete efforts are made to remove the very hardest hitters.

A central feature of credit card manufactured spend is that it relies on spending as much as possible: more spend equals more profit. Debit card manufactured spend is often just the opposite: the goal is to generate transactions, not spend, and this creates surprising difficulties.

Why manufacture transactions?

There are a few main reasons you might want to manufacture debit card transactions. Some accounts charge fees for inactivity, and a $0.01 debit card transaction is enough to avoid the fee.

Other accounts, like the Consumers Credit Union Rewards Checking account that I use as my petty cash account, require a certain number of debit transactions to trigger their higher interest rates. Note that there are other, higher-interest-rate options available; I find DepositAccounts.com quite reliable for tracking them.

A product that, as far as I know, never took off in the travel hacking or personal finance community is the round-up savings account. These accounts have high interest rates but can only be funded by “rounding up” your change on debit card purchases. To achieve a meaningful balance in the account, it’s necessary to make an arbitrary number of debit card transactions with a cent value as close to 1 as possible, resulting in a 99-cent deposit.

Why is manufacturing transactions so hard?

I found it a bit counter-intuitive at first that manufacturing transactions profitably is as complicated in its own way as manufacturing spend. In both cases, the issues come from the fact that we’re using tools we don’t control for purposes they aren’t designed for. Here are some of the main problems I’ve encountered.

• Per-transaction costs. While many financial services have lower fees for using debit cards than credit cards, that’s primarily by charging flat fees rather than lower percentage fees, and flat fees make manufacturing transactions more expensive.

• Transaction minimums. A lot of options require transactions of at least $1. This is an obstacle to scaling, since even if you’re recuperating 100% of your transaction value, the larger each transaction must be, the more money you need to have tied up in the system at any one time.

• Processing rules. If a service processes your transaction as "PINless debit,” instead of as a credit card, then it may not count towards monthly transaction requirements. For round-up transactions, there may be rules about how far apart transactions have to be spaced.

• Closed loops. A lot of obvious options do work, but the money goes into a closed ecosystem where it has to be spent. Your Amazon gift balance can only be spent at Amazon, payments to your electric company have to be spent on electricity, etc.

• Automation. Arbitrage opportunities are so persistent not because they’re particularly complicated. Most of them could be learned by a person of average intelligence over the course of a light lunch. The reason they last so long is that most people already have a job and don’t want another one. Automation is a solution, but researching ways to safely automate large numbers of financial transactions is yet another job.

These constraints can interact with each other as well. Your cable provider might allow you to automate payments with a minimum of $1, which looks like a tidy solution until you realize that your cable bill can only be spend on cable, which puts a soft ceiling on the number of transactions you can generate with that method each month.

Here’s a roundup of the options I’ve looked into and some thoughts on each.

Plastiq (grandfathered)

I’ve used the Plastiq bill payment service on and off for years now. It’s changed so much that instead of using it overwhelmingly to manufacture spend, I now use it primarily to manufacture transactions. Under their old pricing model, using debit cards had a low fixed fee, so I scheduled twelve $1 payments per month until sometime in mid-2026. If I fall into a coma, at least my money will still be earning 3% APY.

As far as I can tell it’s no longer possible to get access to the old pricing, but this highlights the kinds of feature you want to look for as these services continue to pop up: low per-transaction price (I pay $0.01 per transaction, so $0.12 per month), easy liquidation (the $1 “payment” gets deposited into another account a week or so later), and long-term automation.

Peer-to-peer payments

I’ve had great success manufacturing round-up savings transactions with Venmo. They have a $0.01 minimum transaction and no fees for debit cards. The $0.01 has to go somewhere, and I’m not comfortable running multiple accounts and risking losing access to the tool entirely, so I send it to another person. This does generate a lot of annoying e-mails, so you probably want to set up some filters so those e-mails don’t drove you or your teammate crazy.

Cash App works as well, but has a $1 minimum transaction, which makes it a cumbersome way to generate round-up transactions. It works well for manually generating monthly transactions, so I do use it to meet the 15-monthly-transactions requirement on my Andrews FCU Kasasa Cash Checking account to earn 6% APY on up to $25,000.

Neither option has built-in automation. There used to be a way to interact with the Cash App ecosystem by text message, which would be a convenient way to automate transactions, but I couldn’t easily find any current documentation of that feature so my guess is they retired it at some point.

Store credit

I reload my Amazon gift card balance $1 at a time to meet some of my monthly transaction requirements, and I was pleased to discover that my $7 monthly Prime membership is charged first against my gift card balance, so I don’t need to worry about storing up too much unused Amazon credit.

I say store credit instead of Amazon credit because a lot of people have several services that have this feature. If you can load your transit pass, Starbucks balance, or cell phone balance $1 or $0.01 at a time then you can meet transaction requirements without the risk of locking up money you’ll never end up spending.

Conclusion

I understand that people feel themselves at a constant shortage of time and attention, even for the things that give them great joy and satisfaction. They are not only uninterested, but often almost offended by the suggestion they’d waste those precious resources on the essentially meaningless task of pushing buttons on their phone for a few minutes a day.

Believe it or not, I don’t find it especially fun or meaningful to push buttons on my phone for a few minutes a day either. But that’s a pretty high bar to hold every minute of your day too. I don’t find it especially fun or meaningful to brush my teeth either, but I’d like to still be chewing with a few originals by the time I’m 80 so I do it anyway.

Whether it’s earning the highest interest rate possible on my liquid cash in high-yield checking accounts, or dumping as much money as possible into my best savings accounts, I just don’t mentally categorize it as something that’s supposed to be fun. You fill out your timesheet in order to get paid, not because it’s going to bring about world peace.

Why do card counters sleep in their cars?

For the last few months I’ve been casually following up on my long-time interest in learning to play blackjack. I’ve now sunk about 100 hours into learning more about blackjack and casino “advantage play” in general, including listening to podcasts, reading forums, and yes, playing for real money in one of our local casinos. While it’s safe to say the casino still has a healthy advantage over me, what has struck me the most dipping my toes into the advantage play community is just how much it resembles the one I’ve been immersed in for well over a decade now: travel hacking.

Introduction to card counting

For those unfamiliar with blackjack advantage play, it consists of three largely unrelated components:

1. The ability to master “basic strategy.” For every set of blackjack rules, each hand of blackjack has a corresponding ideal move that offer the highest expected value to the player. This move does not always increase your chances of winning the hand; sometimes the move with the highest expected value is to surrender your hand and half your bet, guaranteeing your defeat! Playing perfect basic strategy reduces the house edge in most blackjack rulesets to 1% or less.

2. The ability to accurately count cards. There are a number of different card counting techniques with various advantages and disadvantages, but they all share the requirement that you update a running count as the dealer reveals each card. The ability to count cards has no effect on your odds of winning any given hand.

3. The ability to make the necessary moves to take advantage of perfect card counting. The most important of these is changing the size and number of your bets depending on your running count.

Note that these three skills are essentially unrelated. Learning basic strategy is a form of pattern recognition. While there are technically 310 different combinations of dealer and player hands that must be memorized to play perfect basic strategy, these fall into just 6-12 “patterns” (depending on how you find it easiest to memorize them). It probably took me 10-15 hours practicing with the “Blackjack101” iPhone app to be able to consistently play perfect basic strategy. If you practice using an app, note that you should find out the most common ruleset at your local casinos in order to make sure you’re getting the most practice on the ruleset you use the most. Different tables at the same casino can also have different rulesets.

Counting cards is a completely different skill, since there are no patterns in the order of cards dealt from a well-shuffled deck. The only way to learn to count cards is through hundreds or thousands of hours of practice. Depending on how you’re wired, you may find it easy or hard, relaxing or irritating, but if you cannot count cards perfectly every time then you cannot play blackjack with an advantage.

Finally, you must be able to adhere to a system of play that maximizes the amount of money at stake when the deck is rich with cards that benefit the player and minimizes the player’s losses when the odds are in the casino’s favor. This is not a matter of math or intellect at all: the knowledge of the correct bet flows mechanically from the method of card counting employed. But the ability to act on that knowledge is a matter of character and circumstance.

Advantage play and travel hacking

Using this framework, the parallels to travel hacking are obvious.

1. Travel hacking requires you to learn and access with relative ease the details of, if not the entire loyalty universe, then at least the programs that are or might be relevant to you. For a casual US travel hacker, that means at least 4 or 5 airline loyalty programs, one or two hotel programs, and a bank rewards program. Serious travel hackers learn much more, including about obscure and foreign loyalty programs.

2. A completely unrelated skill is learning and monitoring the current state of travel hacking techniques. Here, just as in card counting, accuracy is absolutely essential, since older techniques are constantly dying while new ones emerge. There’s no point applying for a signup bonus that expired last week, or expecting bonus grocery store rewards for a promotion that starts next Friday. Just as the skill of card counting atrophies without constant practice, returning to travel hacking after a long break requires refamiliarizing yourself with the current state of play.

3. Finally, perfect knowledge of loyalty programs and travel hacking techniques is useless without the ability to make the moves necessary to take advantage of them.

Most people cannot play blackjack with an advantage or succeed at travel hacking

A common lie, the motives behind which I’ll return to shortly, is that “anyone can win at blackjack” or that “anyone can be a travel hacker” (the latter claim normally safely couched by affiliate bloggers as “anyone can save money on travel” or something equally mealy-mouthed).

This is, of course, false.

Most people can’t play perfect basic strategy or memorize a dozen airline sweet spots because it is boring and has no meaningful connection to their everyday life.

Most people can’t count cards or decide whether a potential manufactured spend technique is worthwhile because it requires tedious and unfamiliar calculations.

Most people can’t make large bets when the deck is stacked in their favor or go big when a one-of-a-kind travel hacking opportunity presents itself because they are loss-averse, bet too low and forego lucrative plays, locking in their losses while passing up the chance to win correspondingly big.

Successful card counters and travel hackers don’t last long

What struck me most while learning about the card counting community and the available resources is that the biggest voices for card counting don’t seem to actually do it very much.

The typical progression is that someone discovers card counting, has a rough introductory period full of endearing anecdotes, then goes on a winning streak of 6-48 months (the length is immaterial). After that, they start Youtube channels, record podcasts, write books, and launch websites to sell card counting content and merchandise.

This is the same progression we see in travel hacking. Someone discovers travel hacking, has a few big scores, gets involved in the community, then they launch a blog, a podcast, a Youtube channel, and an affiliate relationship with the credit card companies.

There are two major reasons for this. First, the money is better, certainly on an hourly basis. Most travel hacking techniques require at least some time and attention to implement on an ongoing basis. Even simple online techniques require you to sit down at your computer and actually click the necessary buttons to trigger your payout each time. Writing a blog post full of credit card affiliate links, on the other hand, creates a kind of passive, semi-permanent money-generating asset as new readers discover the post and click through to your payday.

The second reason is that most people, even skilled, experienced people, don’t seem to enjoy it very much. For a lot of card counters and travel hackers, actually putting their knowledge to work seems like an unfortunate chore at worst or a dead-end job at best. “Running a business” packaging bite-sized tips on Tik Tok while burnishing your reputation as a Respected Elder must seem like bliss by comparison.

Why do card counters sleep in their cars?

One of the questions posed in the original “Freakonomics” book was “Why do drug dealers still live with their mothers?” The answer they arrive at is that despite handling enormous amounts of money, most individual drug dealers make poverty wages, so they live with their mothers, like many people who don’t make any money and are on speaking terms with their parents do.

What you realize listening to professional card counters is that they live in a kind of self-inflicted misery, driven in large part by the fear of “giving away their edge.” This often takes the ironic form of ascetisism. A common boast is that during a gambling trip a player will play for 20 hours straight every day. When they travel in teams, advantage players will bunk up in a single hotel room like a high school marching band to save on rooms. One player described sleeping in his (heated and air -conditioned) Tesla over the summer as he drove from casino to casino counting cards.

Importantly, this behavior is not driven by anything inherent to the principles of blackjack advantage play. In blackjack (if the dealer is using a “shoe,” or box of cards that are shuffled only once and then dealt out in order), each shoe is a new randomly ordered sample of cards, so the player’s result from the current shoe cannot have any effect on the probability of winning the next one. That means the player’s advantage, if any, is the same regardless of the number of shoes played. In other words, the player can stop at any time without affecting in any way the expected value of the hours they do play.

And yet, people who claim they have an expected advantage over the house of $100 per hour are willing to work for 20 hours in a row before falling asleep in their cars, all in order to save a few hundred dollars on a hotel room.

Conclusion

Lest anyone suggest I’m being snobby when suggesting most people can neither play blackjack with an advantage nor travel hack successfully, nothing could be further from the truth. Neither requires any special aptitude or gift.

Most people cannot do it because most people do not want to do it. If you try to talk to them about it, they may pay attention for a longer or shorter period of time out of politeness, and then they will lose interest and seek to change the subject to something that interests them instead of something they find tedious.

This is good and proper, not because it “preserves the opportunities for longer” or any hogwash like that, but because people should go through their lives seeking out things they find interesting and rewarding, not be lectured to by pedants about how they’re leaving money on the table by not doing whatever that particular pedant happens to believe is best for them.

The flip side is that when a nice online personality tells you something is easy, fun, and profitable, there’s a good chance that it is: for the person trying to get you to participate, against your better judgment.

Don't sleep on the Better Balance Rewards forced product change spending bonus

One of the interesting things about Bank of America credit cards, historically, has been that they were pretty indifferent to how many of the same credit card you carried. Bank of America’s credit card portfolio isn’t terribly impressive, but they had two gems where this indifference really shone: the Alaska Airlines suite of personal and business credit cards, with their generous annual companion tickets, and the Better Balance Rewards card, which offered $30 in cash per quarter, per card, as long as you simply paid off your card’s balance each month.

Knowing Bank of America’s willingness to let you carry multiple copies of the same card, many people used the Better Balance Rewards card as a target when requesting a product change from a card they’d already met the signup bonus on and didn’t have any more need for. $30 per quarter may not sound like much, but once you had a system set up to charge and pay off the card, it was also free money, which folks in our hobby are typically fairly interested in.

Back around May, 2023, those cards were forcibly product-changed into Unlimited Cash Rewards cards, which can be as good a way as any of earning 2.625% cash back on all purchases if you have Platinum Honors status with Bank of America. Of course, there’s no reason to have more than one 2.625% cash back card, so it wasn’t unreasonable to bemoan the loss of your cache of Better Balance Rewards cards which provided a steady flow of quarterly income.

Sidelined in that conversation was the fact that alongside the loss of passive income, the new Unlimited Cash Rewards cards came with a bonus of $200 when you spend $1,000 on the card by September 30, 2023. Since there’s no reason to put actual spend on more than one of these cards, I suddenly worried that folks who had more than one Better Balance Rewards card may have forgotten about the little glossy sheet that came in their new card’s envelope describing the free money they were entitled to.

So, since September is not all that far away, be sure to score the $200 product change bonus before you cancel your new Unlimited Cash Rewards cards or change them to a more valuable product.

Cross-post: My So-Called Gig Economy

[Dear readers: this is the first and only post from my new blog about the app-based delivery economy you’ll find here on the main Free-quent Flyer Blog feed. You can read or subscribe to that blog at its own home, My So-Called Gig Economy.]

I recently decided, due to a combination of boredom and poverty, to try to break into the gig economy racket before it’s too late, as rising interest rates are set to destroy the ability of the existing delivery companies to continue to finance their operations through endless inflows of venture capital.

Since I think the subject will be interesting to some, but not all, of my existing travel hacker readers, and some people who have no interest in travel hacking, I am breaking my experiences with app-based delivery companies out into a separate blog, which I’ve tentatively titled “My So-Called Gig Economy.” I’m hosting the blog so I reserve the right to change the title at any time, for any reason or no reason at all. Suggestions welcome.

Before I get into my usual way-too-specific specifics, I thought I’d run through some preliminary material first.

Why work?

I’ve been fortunate enough to live a pretty interesting life so far, accumulating degrees and qualifications like a good Millennial all along the way, but after getting fired from my last job in March, 2020, I’d frankly assumed I’d never work for anybody else again. And, judging by the astonishment of my friends and family when I told them I was looking for a job, nobody else did either.

But as my long-time readers know, I have an unfortunate literal tendency and even more unfortunate longing to prove people wrong, so when the pages of our national newspapers were filled, day after day, week after week, with pressing news of the “labor shortage,” I had to find out for myself what all the fuss was about.

So I started applying for jobs, everywhere and anywhere I could think of. I applied at the little grocery store I shop at 3 times a week. I applied at the medical cannabis dispensary down the street. I applied to be a front desk clerk at the Washington Hilton. I applied for every job in the DC government. I almost signed up for the National Guard but had second thoughts just in time.

No takers. Having proven my point, to myself at least, that the problem is an unwillingness by employers to hire, rather than an unwillingness by workers to labor, I was ready to consider my work done. That would have been the end of the story, but for a critical intervening factor.

Why app-based delivery work?

That factor is that I have unlimited free bike and scooter transportation. Once you remove the profit (or, in the case of delivery apps, the loss) taken by the middleman, app-based delivery work has essentially three inputs: social capital, time, and transportation.

This calculation is conducted differently depending on the context. Often, you’ll see people take their total income from a day or week of deliveries and then deduct a blended fuel/depreciation rate for the use of their private vehicle. This allows them to calculate a crude “pre-tax” hourly pay rate.

But that crude calculation makes no sense in my case: I don’t own a private vehicle and don’t pay to operate, store, or fuel one. Likewise, since I don’t have a job, I don’t have any benchmark with which to compare the hourly income from my delivery work. This is not to say my time is “worthless” (I like my time!) just that there’s no monetary rate to usefully compare it to, since no one will hire me to do anything else.

So I decided, once and for all, to figure out what the deal is with the gig economy, specifically the app-based delivery gig economy.

Prospectus

My usual approach is to go all-in on new projects all at once, but it’s remarkably difficult to find useful information about getting started in the app-based delivery economy, so I’m making an exception and am instead going to proceed one app at a time, and hopefully end up creating the kind of objective, unaffiliated, unsponsored resource I myself have been looking for the past few weeks.

I’ve tentatively decided that my first app to experiment with is DoorDash, so if you have a driver referral link, please leave it in the comments or send it to my usual e-mail address: freequentflyer@freequentflyerbook.com (there’s no way I’m creating a new e-mail address for this blog).

In my next post, I hope to cover signing up (with or without a referral link), figuring out what gear I want or need, and hopefully my first delivery.

My short, boring COVID-19 infection, treatment, and recovery

Since the beginning of the pandemic, my family has taken the novel coronavirus just about as seriously as anybody we know. In one way this was made easy since the United States imposed virtually no restrictions during the entire course of the plague, and we were already used to working remotely, so office closures didn’t make much of an impact on our day-to-day routines. And, at least in the period since rapid testing became free and easily available, we managed to avoid contracting the virus to the best of our knowledge.

Until now! For readers who have similarly been dodging raindrops since 2020, I thought a quick breakdown of my infection and recovery might be interesting.

Background: vaccinated, boosted

Since the initial rollout of vaccines, I’ve been eager to get to the front of the line, and received Pfizer doses on March 13 and April 13, 2021, plus a Pfizer booster on November 19, 2021. I had no reaction to my initial dose and booster, but the second dose left me with aches and pains and a very low fever for around a day afterwards.

Infection: possibly Saturday, August 27, 2022

As I said, my family is extremely diligent about wearing high-quality masks indoors, and if I had to guess I’d say mask wearing indoors in our area is roughly 30-50%. On Saturday I went to a crowded, hot, outdoor farmers market, and while I wore my mask much of the time, essentially no one else did.

First symptoms: Monday, August 29, 2022

I’ve been spending a lot of time at our outdoor community pool lately, since it is scheduled to close today, and on Monday started to feel pretty rough. I thought it was some combination of dehydration and heat stroke, and when I got home my partner seemed worried I was a bit out of it. Overnight I began coughing, and woke up with some chest pain.

First positive test: Tuesday, August 30, 2022

It didn’t occur to me to test Monday night, but on Tuesday morning I took one of the dozens of rapid tests in my linen closet, and it came back an immediate positive. It turns out you don’t really need to wait the full 15 or 20 minutes to get your test result: if you’re positive, the test will show it almost right away.

Since I had a pantry full of tests, I promptly took a second one, which if anything came back even faster. I had COVID-19.

Paxlovid telemedicine appointment: Tuesday, August 30, 2022

My city has contracted with a telemedicine provider to prescribe Paxlovid, the anti-viral medication that’s under emergency use authorization from the FDA to treat COVID-19 in high-risk adults. After a few minutes of fretting, I decided to go ahead and request an appointment. The nice lady on her couch in Arizona asked me a few questions, confirmed I was eligible, and said she’d send my prescription in to the pharmacy of my choice. Within 15-20 minutes I was notified my prescription was ready for me at my nearby Safeway pharmacy.

Now, you may have already foreseen an obvious problem here: the pharmacy is inside the Safeway. But I’m a highly infectious carrier of the novel coronavirus. But because this is America, there was nothing to do about it. I walked into the pharmacy, asked for the prescription, and the pharmacist recoiled in horror: “You cannot be in here! You are putting all of our lives in danger!”

Well, no shit lady, that’s why I need the pills. She ended up relenting, and thus my Paxlovid journey began.

(Failed) quarantine

During the first 3 days of my positive tests, my partner and I did our best to maintain an in-house quarantine. We knew I was positive, and we knew she was exposed, but she was still testing negative, so our logic was the more we could do to isolate, the higher a chance we could keep it that way. On Friday, 3 days after my first positive test, she finally tested positive as well. Given the near-certainty I was the source of the infection so we weren’t risking any radical mutations in the virus, at that point we broke down the quarantine and started a Lord of the Rings marathon.

Paxlovid treatment: Tuesday PM - Sunday AM

The Paxlovid treatment is pretty simple: 3 pills, twice a day, for 5 days. I only had two side effects, diarrhea on the first two days, and Paxlovid Mouth the entire time. For obvious reasons, I’ll focus on the latter.

Paxlovid Mouth is strange because it began almost as soon as I took the first evening’s round of medication, and is only completely wearing off now (about 30 hours after my last dose). If you’re not familiar with the term, it’s an extremely widely experienced side effect of Paxlovid that gives the entire inside of your mouth a single, rather unpleasant, bitter flavor. I compare it to the moment after you swallow a bite of grapefruit, when the sweetness is gone and your mouth is left tasting only the underlying bitterness.

It’s not that bad to begin with, if you’re expecting it, and after a while you get used to it, but it doesn’t really go away the entire time you’re taking the drug — except when you’re eating and drinking. If it bothers you a lot there’s not really anything to do but have a range of sweet and savory snacks lying around to suck on, since as long as you’re eating or drinking, the sensation goes away entirely.

First negative test: Saturday, September 3, 2022

As I said, since I have a closet full of rapid tests, I didn’t see any reason not to test every day. Between Tuesday and Friday all my tests were positive, but Saturday morning I got my first negative rapid test, and had the same result Sunday and today, so my total tested positivity period was just 4 days (although if I had tested Monday, August 29 I’m sure it would have been positive as well).

I’m now feeling fine, although mindful of the possibility of a “rebound” like Biden and Fauci experienced after their own courses of Paxlovid treatment.

Conclusion

I am perfectly aware that it’s impossible to say anything apolitical about the pandemic, and I am not going to try.

I got vaccinated and boosted as soon as possible.

I wear high-quality masks indoors and on transit.

I began Paxlovid immediately after testing positive.

I quarantined.

I had a short and uneventful experience with the disease.

Other people who took none of those steps had the same outcome.

Other people who took all of those steps died.

But I’m happy I took the steps I did and happy I had the outcome I did.

Interest rates are starting to get more interesting

One of my favorite resources is DepositAccounts, which performs the simple, essential function of aggregating interest rates across a vast array of savings products. As you’d expect, the site is financed by ads and affiliate links, but in my experience the data is extremely accurate, so they’re a great first-stop when you’re exploring what’s the best place to put your money. All of that is just to say, most of the datapoints below come from DepositAccounts, not any original research of my own.

Yes, higher interest rates are passed along to (vigilant!) customers

There’s a stale cliche that when oil prices rise, gasoline prices jump immediately, but when oil prices fall, gasoline stays elevated. Of course there’s no mystery there: when gas prices rise satellite vans park outside gas stations doing live interviews with regular folks complaining about the price of gas, and when gas prices fall the media move on to the next crisis.

Most people are even less conscious of how prevailing interest rates change over time. If you only buy a few houses in your lifetime, your awareness of mortgage interest rates is limited to may four or five snapshots in time. Even someone who replaces a car as often as every 3 or 4 years has much less awareness of auto loan interest rates than they do the price of gas.

Finally, most people don’t shop around for higher interest rates on their savings even as much as they do for lower interest payments on their loans. That’s why whenever I hear people complain that banks don’t pay anything on savings anymore, I ask them, “have you checked?”

Series I Savings Bonds are already interesting

A lot of folks have written about this deal already (myself included), but to summarize, Series I bonds have their interest rate for the next 6 months set twice a year, in May and November, but each reset is known several weeks in advance. For example, we’ll know the November, 2022 interest rate on October 13, 2022, when September’s consumer price index reading is announced.

This creates two opportunities, in April and October, to know the interest rate you’ll earn on new Series I bonds for an entire 12-month period. My favorite tool, although I’m sure there are many others, for tracking these interest rate adjustments is the very primitive Tipswatch. There you can see the rate you’re guaranteed to earn for 6 months on all Series I bonds purchased through October 31, 2022 (9.62% annualized), and the 4 known monthly components of the November rate adjustment, which you’ll earn for the second 6 months of your first year.

I have mixed feelings about long-term holding of Series I bonds, but I have unalloyed positive feelings about using them for medium-term savings in April and October, when you know the interest rate you’ll be paid for the entire initial 1-year holding requirement.

Rewards Checking accounts for high rates, benefits, and liquidity

While I was cruising around DepositAccounts I checked, as usual, what rates they were reporting on Rewards Checking accounts. These are federally-insured, fully liquid checking accounts that, when you perform a series of requirements each month, offer elevated interest rates and usually a few other potentially-valuable benefits, like refunded ATM fees (which can be worth more than the interest during months you’re traveling extensively!).

I was immediately confused because my beloved Consumers Credit Union Rewards Checking account, which has been at the top of the list as long as I’ve been checking it, no longer appeared at all!

Thinking I might have missed an e-mail announcing they were no longer offering those accounts, I hurried over to Consumers’s website and immediately discovered the reason for the omission: the site had been updated with new, even higher interest rates, and the new page must have broken the scrubbing tool DepositAccounts was using.

The highest rate is now 5% APY on balances up to $10,000, which is not quite as high as the 5.09% on up to $20,000 the account could earn when I first opened it, but still higher than any other accounts we’ll be looking at today. The requirement for 12 debit card transactions and $500 in ACH credits or mobile check deposits, plus $500 or $1,000 in Consumers credit card spending for the highest two rates, remains the same.

The next highest rate listed is 4% APY on up to $20,000 at Elements Financial. Besides the usual gimmick of requiring 15 debit card transactions, there’s one huge asterisk: you’ll only earn that rate for 12 months, before it drops in half to 2% APY. If you have $20,000 you want to keep liquid and an easy way to automate your 15 monthly transactions, that may be worth doing for a year (no direct deposit is required), just be sure to set a calendar reminder for 12 months from the day you open your account!

Certificates of Deposit are on the verge of being interesting

Next I scooted over to DepositAccounts’s CD page, which besides scraping rates off countless bank websites, also groups them by term. You can see how obviously helpful this would be when building a CD ladder, since it makes it instantly obvious which CD-issuer you should choose for each rung of your ladder. One thing to note is the system does group CD’s into approximate terms. This is important because many of the highest-earning CD’s are of odd durations, but DepositAccounts engine sensibly lumps a 49-month “special term” CD in with the 4-year CD’s instead of breaking it out separately.

With all that said, let’s look at what’s going on with CD rates by looking at the highest rates offered in each of the DepositAccounts term buckets:

• 3-month: 3% APY at TotalDirectBank (note the very high minimum)

• 6-month: 4% APY at Sun East FCU (9-month also available at same rate)

• 1-year: 3.14% APY at Lafayette FCU

• 18-month: 3.75% APY at NASA FCU (15-month CD)

• 2-year: 3.59% APY at La Capitol FCU (26-month CD, includes option of one-time interest bump)

• 3-year: 3.55% APY at Bread Savings

• 4-year: 3.85% APY at NASA FCU (49-month CD)

• 5-year: 3.65% APY at Bread Savings

• 6+-year: 3.25% APY at Marcus, Evansville Teachers FCU, and Discover (terms up to 10 years)

A few obvious things jumped out at me here.

First, in nine term buckets, there are nine unique institutions, so if were purchasing CD’s for multiple terms from a single issuer, you would be virtually certain to be leaving some interest on the table.

Second, these interest rates are almost high enough to begin looking competitive with rewards checking accounts. Earning 5% APY on $10,000 in liquid cash is great, but if you have somewhat more money you’re unwilling to risk losing, and are willing to give up just a little liquidity, earning 4% APY on 6-month and 9-month CD’s from Sun East is at least worth thinking about long enough to decide if it’s the right move for you.

Third, this combination of terms and rates has a peculiar feature: the longest-term rates are lower than the shortest-term rates, while the medium-term rates hover in a tight range. I say it’s peculiar because commonsense would say that long-term deposits are more valuable to a bank than short-term deposits, so banks should be willing to pay more interest to lock in those funds for longer. Instead, over the longer term we see rates collapse.

The reason is simple: when banks guarantee interest payments on a deposit, they’re not just betting that they’ll be able to make a profit while paying that interest rate today, but that they’ll be able to make a profit paying that rate across the entire term of the deposit, in other words, on the future course of interest rates.

Since the cost of your money is fixed (the interest they pay you), the profitability of the deposit depends on how much it earns them (the interest their borrowers pay them). If interest rates go up, the cost of the deposit remains the same, but interest revenue and profits increase. If rates fall, then your deposit earns the bank less money, but costs them the same to hold.

Limiting the premium they’re willing to pay long-term depositors is a way of hedging that bet on interest rates. If banks expected rising interest rates over the medium and long-term, they’d reduce their hedge and be willing to pay more to lock in long-term deposits at today’s (compared to the future) cheap rates. The more worried banks are about falling interest rates, the shorter a period they’re willing to commit to paying today expensive rates for.

Treasuries may already be interesting in high-tax states

I was glancing over the Vanguard Fixed-Income page and was genuinely a bit surprised at how much rates had risen recently:

View fullsize

Over the short-term these rates are already close enough to compare favorably to CD’s, especially if you prefer to keep all your fixed-income in one place like a brokerage account rather than scattered all over the country.

But even over the longer term, remember that the interest treasuries pay, unlike CD’s, is taxable only at the federal level. In a high-income-tax state, a slightly lower interest rate may leave you with more disposable income after taxes.

Conclusion

To offer some quick takeaways:

• Both higher and lower interest rates are passed through to customers.

• Shop around. No one financial institution is going to have the best version of every product.

• The interest rate structure shows that banks are betting on flat and falling interest rates in the long term. If you think they’re wrong and that rates will rise instead, then keep your money in higher-interest shorter-term accounts to take advantage of those rising rates. If you think they’re right and that rates will in fact fall, then lock in today’s relatively high rates for as long as possible.

Background and review of my week living an all-scooter lifestyle

Over on my personal finance blog I wrote about the range of programs offered by the so-called “micromobility” companies to provide free or reduced cost access to the scooters and e-bikes that clutter the streets and sidewalks of even the nation’s small- and mid-sized cities. Having experimented with the programs for a little over a week, I want to share my experience using dockless scooters for virtually all my errands.

Experience applying for access programs

Here’s a quick rundown of my experience applying for each of the micromobility access/equity programs:

• Capital Bikeshare for All (online signup appears to be unavailable right now): our local docked bikeshare system is actually administered by Lyft, which also administers their "Capital Bikeshare for All” program. The only program that’s not free to sign up for, once approved you’re eligible for a $5 annual membership which allows you unlimited rides up to 60 minutes. This is actually more generous than regular $95 annual memberships, which offer unlimited 45-minute rides, presumably to reduce the risk of low-income riders accidentally incurring overage fees.

• BIKETOWN for All: I spend a lot of time in Portland, OR, and happened to be there when I started working on this project, so I looked into whether their docked bikeshare program had an accessibility program. Sure enough, BIKETOWN for All, also administered by Lyft, offers an identical benefit of unlimited 60-minute rides, including ebike rides (excluded from Capital Bikeshare for All). I created a BIKETOWN account and applied for BIKETOWN for ALL on June 27, 2022, and later that evening I received confirmation I was eligible and told to sign up for an annual free membership.

• Lime Access: I applied for Lime Access on June 23, 2022, and didn’t hear anything in the “couple of days” promised, so sent a follow-up e-mail to access@li.me on July 1. Finally, on July 8, I received an e-mail confirming I’d been approved. Instead of free rides I was given discounted pricing of $0.50 per unlock and $0.07 per minute. I appreciate the gesture, but I’m not here to pay money.

• Helbiz Access: I wasn’t able to apply for Helbiz’s accessibility program online, but after e-mailing access@helbiz.com with my ID and eligibility documents on June 27, 2022, I received a prompt reply on June 29 confirming my enrollment in Accessibility+, which includes 100 free 30-minute trips per month.

• Bird Access. Like the other micromobility companies, Bird offers a confusing array of discounted and free programs depending on the city you apply from. I started by submitting a support ticket for Bird Access online on June 23, 2022, and less than an hour later received a form e-mail explaining the process of enrolling in Community Pricing (their version of Lime’s discount program). I replied by e-mail that I wasn’t interested in Community Pricing, but rather the free Access program. Again after less than an hour I received a reply correctly explaining the Access program, and asking me to send a photo of my proof of eligibility, which I did the next morning. On July 6 I sent a follow-up e-mail, and less than 30 minutes later received a confirmation that I’d been enrolled for unlimited free rides.

The rest of this post will be dedicated to my experience using Bird scooters, so I’ll just offer a few remarks on the other programs first.

I paid the $5 Capital Bikeshare for All membership fee and did a little tooling around the neighborhood, but I don’t own a bike helmet so until I get one I’m not comfortable doing longer-distance rides (subscribe to the blog to support my newfound biking hobby!). I didn’t get a chance to take any BIKETOWN rides before I left Portland.

Lime is the only dockless scooter I’d ever used before, and I thought it was “kind of neat,” but the problem is that it’s very expensive. The $1 unlock fee (plus per-minute fees) means that for rides of any length whatsoever the bus or subway will be cheaper by an order of magnitude. Obviously a discounted fare will be cheaper than a full-price fare, but for almost all trips I’d rather walk or take the subway.

I have nothing to say about Helbiz because I have never been able to unlock the cable lock now required by DC on all dockless bikes and scooters. I can start a ride, I can push the unlock button, and nothing happens. If anyone has ever successfully unlocked a Helbiz cable lock, please, reveal your secret in the comments!

This isn’t a Bird ad — let’s do the criticism first

I’ve been deliberately taking Bird scooters everywhere for the last week to get as nuanced a sense of the advantages and disadvantages as possible, and I’ve simply fallen in love with them. Since this is going to be a glowing review, let me start with the downsides, of which there are many!

First, and this is a bit silly, Bird requires you to buy a minimum of $10 worth of “Bird Cash” before you can unlock any scooters. I consider this basically a $10 lifetime membership, since I never plan on spending any of it, but it’s twice the price of a $5 annual Capital Bikeshare for All membership, so Bird Access isn’t exactly free.

Second, while I’ve had a lot more luck with Bird cable locks than with Helbiz locks (0%), it hasn’t been 100%. I would estimate around 15-20% of the time Bird cable locks fail to open, whether for mechanical or mobile connectivity reasons. Fortunately, in my city Bird scooters are fairly ubiquitous, so it rarely poses a problem, but if you’re counting on a particular scooter you see available in the app, keep a backup or two in mind because the lock may simply not pop when you need it to.

Third, and of course this is true of all the scooter companies, maintaining balance with heavy groceries requires some practice and involves some danger. This isn’t a big deal when you’re just out for a joy ride, but if you plan on doing regular grocery or other shopping you probably need to invest in a well-balanced cargo backpack (and a helmet wouldn’t hurt).

Finally, give yourself a few rides to get used to the acceleration and speed of electric scooters. Electric motors famously have almost-immediate acceleration to top speed and if you’re not used to it you will be caught off balance. Start slow, get a feel for the throttle, and drive more defensively than you have ever driven before. In my city scooters are electronically regulated to 10 miles per hour which sounds slow, and would be if you were planning to scoot cross-country, but is faster than you are, realistically, able to walk or even jog. Going uphill I regularly pass bikers, and on side streets either keep up with or beat traffic most of the time. In short, 10 miles per hour in city traffic is faster than you think.

Bird Access has been amazing

With that out of the way, unlimited free usage of Bird scooters has been awesome. The easiest way to describe it is that it lowers the hurdle to doing anything. I’m far from a homebody — I walk 5 or 6 miles a day — but when walking even I consider my direction, elevation, route, etc. Bird Access throws all that out the window.

When a 15-minute walk to the grocery store takes 3 minutes, then forgetting to pick up an onion isn’t such a big deal. When a 30-minute walk to a new takeout place takes 5 minutes, you try new takeout places. When an hour-long walk to the comedy club takes 10 minutes, you try out new comedy clubs. On a purely literal level, easy access to rapid point-to-point transportation makes the tradeoff between space and time much more flexible. Walk short distances, scoot medium distances, take transit long distances, with the definitions of “short,” “medium,” and “long” left entirely up to the reader.

Bird has an interesting feature that I had to figure out for myself, since like most apps these days, it doesn’t come with any documentation: you can “lock” a scooter without “ending” your ride. If you’ve never paid for one of these scooters that might sound like nonsense, but essentially it means you can keep anyone else from taking “your” scooter while you pop into a store to shop, so that when you’re finished shopping you don’t need to pay for another unlock fee. This isn’t terribly relevant if you’re riding for free, but it’s slightly more convenient than going through the rigamarole of “ending” and “beginning” rides every time you want to pop in for a baguette or a stir-fry (as I did the first few days until I discovered this feature).

One thing I was worried about when I adopted my all-scooter lifestyle was that I’d be getting less exercise. If scooting is so easy, surely I’ll spend less time walking. But this is a simple well-known error: increased access to (non-car) transportation on average increases physical activity, and indeed a quick glance at my iPhone’s step-tracking app doesn’t show a blip on the day I started scooting.

Conclusion: Scoot Free or Die

Bird Access has a funny feature: when you end each ride, it tells you how much you would have paid if you were paying. Over the last week I’ve take about 37 rides, which I would ballpark at around $100 (partly because I didn’t find the “lock” function mentioned above until about mid-week). In other words, you would have to be insane to pay money to live my all-scooter lifestyle. The logical, sensible thing to do would be to simply buy a personal scooter: even the high-end models top out at a few hundred bucks, after all.

But I don’t want to own a scooter. I don’t want to worry about it getting stolen, I don’t want to worry about maintaining it, I don’t want to worry about whether I’m over-charging it or under-charging it, and I don’t have anywhere to put it. What Bird Access offers is the best of both worlds: unlimited free access to scooters whenever and wherever I want them, and absolutely no responsibility for their care or maintenance. I hesitate to even call it a “business model,” since none of these micromobility companies has ever or will ever make any money, but as long as the rides are free, I’m scooting.

When did content creators get to be such big whiny babies?

I have a very boring origin story as a blogger: when I was in grad school, I got into travel hacking. After travel hacking for a few months, I realized that virtually all the existing blogs were dealing misinformation to their readers in order to sell credit cards, so I wrote an eBook laying out how travel hacking really works, and launched this website to promote the book (hence the clunky URL which we have all come to know and love).

Well, the book was a dud (thanks to all hundred of you who bought and borrowed it from Amazon over the last decade!), but the site took off, and I’ve been writing here ever since. So blogging for me has always been a case of learning by doing, and the same is true when it came to “monetization.” All the blogs I followed had Amazon affiliate links, so I signed up for Amazon affiliate links. All the blogs I followed had Google Adsense widgets, so I installed Google Adsense widgets. All the blogs I followed had credit card affiliate links, so I applied for credit card affiliate links. And, just in case, I also added the option to subscribe to the blog (originally through PayPal “recurring payments” of all things) and receive occasional subscribers-only newsletters.

It turns out, just like my book sales, Amazon, Google, and credit card affiliate links were all a bust. I don’t write about random crap on Amazon so I have nothing to link to. I don’t write about any high-value Google keywords, so Google only pays me once or twice a year when I crack the $100 payout threshold. And my credit card affiliate link provider immediately shut me down when they realized I was scraping the underlying links from their “preferred” ad copy.

Subscriptions, it turned out, were a model that worked great for me. Even after PayPal shut down my account (for unrelated hijinx), over 90% of my subscribers voluntarily migrated over to my new subscription manager, which I thought was very cool of them.

All of which is a roundabout way of getting to my point: even if it’s true your users are your product, rather than your customers, doesn’t it still seem awfully rude to throw a big fit when they don’t behave as you demand?

The travel blogger crybaby lost his bottle

All these thoughts came to me as I read Gary Arndt’s elegy on leaving text-space for voice-space. Gary lays out an incredible story arc:

• “I was writing for an audience of real people who knew who I was and had made a decision to follow me. My website was an attempt to entertain and inform them about my travels.”

• “…as social media began to take off, I like many other people jumped on that bandwagon.”

• “This gave rise to clickbait and doing anything possible to grab eyeballs and clicks in competition with every other website on the internet.”

• “This meant a slavish devotion to Google and writing articles optimized for bots and algorithms, not actual people.”

• “My income dropped by 95% within a few weeks in March 2020. Traffic to my website dropped. Affiliate sales went to zero and still haven't really recovered for me. All the contracts I had lined up were canceled. An in-person event I had in the works was canceled. Reader tours I had planned were canceled as well.”

What’s astonishing about this story is the complete lack of agency Gary sees in his “downfall.” His website started off as a passion project for interested readers, but then he was forced to jump onto the bandwagon of social media by the “takeoff” of social media, forced to write clickbait to grab eyeballs, forced to slavishly devote himself to Google, and then forced to confront a sudden pandemic drop in his income.

But nobody did this to Gary. It’s not Amazon’s fault nobody uses my affiliate link, it’s not Google’s fault I don’t use high-value keywords or optimize my website for search engines (although Google also is apparently committing a lot of fraud through their Adsense auctions), and it’s not credit card companies’ fault I refuse to use their prewritten copy. My lack of affiliate income is a consequence of my own choices: that I write for the benefit of my readers.

Nobody ever stopped Gary from attempting to entertain and inform his audience about his travels! Everything that took that initial satisfaction away from him was the entirely predictable consequence of his own choices.

Matthew 6:24

Obviously I’m exaggerating a bit for comic effect. After all, I’m not a “personal responsibility” guy — after his income crashed in 2020, I hope Gary applied for EIDL and PPP loans, I hope he applied for Pandemic Unemployment Assistance, SNAP, Medicaid, LIHEAP, and I hope he got all the social assistance he needed to pay his bills and stay safe throughout the pandemic.

But nobody made him reliant on social media, nobody made him reliant on search engine rankings, and nobody made him reliant on affiliate revenue. I don’t know Gary, I’ve never read a word he’s written before today, maybe he’s been doing dynamite work as a travel blogger for decades. But at the end of the day, he chose to sell his readers to advertisers, instead of selling his content to readers. That’s a choice millions of people make every day, rightly or wrongly, wisely or unwisely. But please, don’t pretend he or any other affiliate marketer is a martyr for facing the obvious, inevitable consequences of their own actions.

How I would (and might) maximize the current Series I Savings Bond deal

There’s an interesting deal available right now for folks who have extra cash lying around they are sure they won’t need for a least one year, and ideally won’t need for five.

Fixed-rate inflation-adjusted Series I Savings Bonds

When I first learned about this deal at Doctor of Credit I admit I scoffed. The high interest rate he described is on an annualized basis, but you’re only guaranteed the reported rate for 6 months, meaning you don’t even get a full year at that rate; it could drop to 0% for the second half of the year before you’re eligible to redeem your bonds, meaning you froze up to $10,000 in cash in a security earning nothing for 6 months of the year!

But, the more I thought about the deal, the more I came to appreciate the potential possibilities. So let’s take a closer look.

Series I Savings Bonds have 4 curious features:

• When issued, they have a fixed rate of interest that is known at the time of issuance and lasts for 30 years or until the bond is redeemed;

• added to that fixed rate is a variable, inflation-adjusted rate of interest that is calculated in November and May of each year and applied to outstanding bonds every 6 months (so a bond purchased in January has November’s rate until July — this will become relevant shortly);

• bonds earn interest starting from the first day of the month they’re purchased, so bonds purchased November 30 will earn interest from November 1;

• with limited exceptions, they must be held for 1 year, and redemptions are penalty-free after 5 years (you sacrifice 3 months of interest if redeemed between 1 and 5 years after purchase. I’m genuinely unsure whether the 1-year holding requirement is to the calendar date or to the calendar month of purchase — if you know, leave a comment!)

Finally, you’re limited to $10,000 in purchases through Treasury Direct per calendar year. You can purchase an additional $5,000 in I bonds through your tax refund, although which fixed and inflation-adjusted rate you get will depend on when Treasury transmits the order to the “Treasury Retail Securities Site in Minneapolis,” so you may not be able to get November’s rates if you file for an extension or your refund is delayed for any reason.

Why do I keep talking about November’s rates?

The fixed rate on Series I Savings Bonds, the minimum rate you’re guaranteed to earn for 30 years, is 0% APY, and has been for most of the last decade. But due to the method Treasury uses to calculate the inflation component of the interest rate, bonds purchased from November 1, 2021 through April 30, 2022, will earn a guaranteed interest rate of 7.12% APY.

Now be careful to understand what’s happening here: APY is calculated on an annualized (that’s the “A”) basis, but you’re only guaranteed to earn that rate for the first 6 months you own the bond. After 6 months, the inflation-adjustment will change to May’s rate, and 6 months after that (when the bond is eligible for redemption with a 3-month interest penalty) it will change to the November, 2022, rate.

Series I Savings Bonds are a highly optioned contingent bet on future inflation rates

One way of assessing a bond investment is to look at its “yield-to-worst,” which refers to the yield you would receive if, for example, a corporation or utility exercised a call option at its face value on a bond to refinance its debt at a lower interest rate before the end of the bond’s term. For a fixed-rate, zero-risk, United States Treasury bond, the yield-to-worst is simply the yield on the bond.

The inflation-adjusted interest rate and possibility of early redemption essentially means Series I bondholders are making a bet on the future of inflation rates, but one in which they have all the power.

You may believe, as I do, that May, 2022’s inflation adjustment will be sharply lower than November, 2021’s. So, what’s the yield-to-worst? Since the inflation adjustment is never less than 0%, and the fixed-rate is 0%, you would earn 0% in interest during the second 6-month holding period. In that case, your yield would be 3.56%. That’s not a shoot-the-lights-out great investment, but it’s a solid return on a completely safe investment. After 12 months, you can pull the money out (sacrificing 3 months of 0% interest) and do something else with it.

But however much you think inflation (technically the CPI-U measure of inflation) will fall between now and May, 2022, it probably won’t fall to 0%. Say it falls to 1.9%, which was fairly common prior to the pandemic — now you’ve earned 4.035% on your investment (after sacrificing the last 3 months of interest), which suddenly starts to look pretty comparable to the rewards checking accounts I regularly write about and use.

Optionality is very valuable

When you take this exercise a bit further, you can see the possibilities are even more lucrative than I’ve suggested, since after one year, you always have three options: “letting it ride,” “trading up,” or “cashing out.”

Every November and May, when the fixed rate and inflation adjustment are announced, you can see what the composite rate will be for the next 6 months:

• Let it ride: if the inflation adjustment remains higher than your other investment opportunities, you can leave the money to earn for another 6 months until the next adjustment, bringing you 6 months closer to the 5-year penalty-free redemption threshold;

• Trade up: if fixed interest rates soar and inflation crashes, then you can redeem your current 0% fixed-rate bonds and buy new, higher fixed-rate bonds;

• Cashing out: if fixed interest rates stay low and the inflation adjustment crashes, you can redeem your bonds and do anything you like with the money.

Obviously this is just another way of saying money is fungible and Series I bonds can be redeemed after one year. What makes this interesting is that this series of options continues every 6 months for 30 years!

What’s the optimal strategy to maximize optionality?

Due to the $10,000 Treasury Direct and $5,000 tax refund purchase limits, I believe the optimal strategy looks something like this:

• buy $10,000 in bonds by December 31, 2021 through Treasury Direct;

• in April, 2022, when the March CPI-U data is announced and the May, 2022, inflation adjustment is finalized, you’ll know the total annualized interest rate you’ll earn (6 months at November’s rate, and 6 months at May’s rate), and can decide whether to purchase another $10,000 through Treasury Direct based on that composite annualized rate;

• finally, by April 15, 2022, decide whether to lock in an additional $5,000 in bonds at the November/May composite rate, or file a tax extension and wait until October, when the November 2022 rate will be finalized, and decide then.

Obviously this represents a lot of corner cases and attention to detail, so it’s not for everyone. November’s rate is so high it would be perfectly rational to just lock it in with $10,000 this year and next year through Treasury Direct, and $5,000 next year through a tax refund. But since the genius of these bonds is their optionality, this is one way you can maximize that value.