T-bonds at 0% why not just keep the money?
- Thread starter Archin
- Start date
Yep, so bills trading above par would mean negative yields, which is a reasonably rare occurrence. For an explanation of why this can (and does) happen occasionally see my earlier post.
They buy the t-bills for the safety of their capital. They can borrow against those bills and trade something else. The bills are in their name, they can't be stolen. Think MF Global.
I had a dream when drugs were legalized soon after grocery bills came to $100,000 per trip. Waking the Pandora's Box is never good if you don't know how to close it.
The risk of default is very present in any US Treasury right now, and, according to the National Inflation Association, every US Federal Security should be rated junk, but they will never default.
If they have the audacity to print $16 trillion and fork it over to abject failures, then they certainly have enough audacity to print money just to pay their own bills.
It is still not rational to pay for 0% coupons, even though the argument is it's in their name it is not at all risk free, but seems to be preferable than the limited protection the FDIC or SIPC can offer individual connections.
They also do this for no other rational reason than the government is manipulating the interest rates so that they can print money without cost or the repercussions of compounded interest.
The risk of default is very present in any US Treasury right now, and, according to the National Inflation Association, every US Federal Security should be rated junk, but they will never default.
If they have the audacity to print $16 trillion and fork it over to abject failures, then they certainly have enough audacity to print money just to pay their own bills.
It is still not rational to pay for 0% coupons, even though the argument is it's in their name it is not at all risk free, but seems to be preferable than the limited protection the FDIC or SIPC can offer individual connections.
They also do this for no other rational reason than the government is manipulating the interest rates so that they can print money without cost or the repercussions of compounded interest.
t bills have no interest and are sold at discount to par.
It's the other way around... They went to zero because the "Total Tendered" was so much more than the "Total Accepted"... You have lots of liquidity chasing these bills...