Want to Lend Money to Uncle Sam? It's Going to Cost You

What would your reaction be if you had a friend who had reached the limit on 20 different credit cards and then came to you to borrow $100? Then imagine that you actually said yes, and when you went to give your friend the $100, he or she actually asked for $101 just for the privilege of loaning the money.

Well, that is exactly what is happening (to a lesser degree) in the US T-bill market. As just another example of the crazy times we are living in, the yield on 3-Month Treasuries went negative Tuesday. There was a time when an event such as this was unimaginable. Today it barely gets noticed.

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Comments

[bosun.j:]

Tar, Feathers, Rope. Start with the Banksters and their lap dogs in Congress. It's a dirty job but somebody has to do it!

2008 Dec 10 11:32 AM

[Nikola:]

WHO IS BUYING?

I'm not. You know anyone who's buying? It would be VERY interesting to know who is PAYING for the privilege to lend money to the US Govt.

And why?

2008 Dec 10 12:13 PM

[Themoose:]

alot of institutions have to clean up their books and by doing so they add treasuries to make them look less risky... just one reason for the spike among many

2008 Dec 10 01:12 PM

[Ricard:]

Thanks for pointing this out. You'd think it would be front page news on the WSJ, but no, it was buried in the markets section.

I have no idea wtf is going on here. My guess is that TIPS supply is not nearly enough to satisfy demand. I second Nikola's question...who is paying for this crap?

Analysis anyone?

2008 Dec 10 01:34 PM

[hanson001:]

Positive spread for the government. Wonder how that auction works. You say I take 0% interest and pay you a fee for allowing me to do this. Wow!

Treasury accounts also contain a "C" or cash acccount. This is were treasury proceeds go until you are ready to make another debt purchase. Why don't treasury buyers just leave their money there and earn no interest?

If the yield on treasuries would stay negative, we tax payers could make all our bailout money back. LOL

2008 Dec 10 05:19 PM