User 269477

How the Treasury Bubble Will Burst and Why

I've seen the movie Mad Max. Things didnt seem so bad, maybe even a little exciting. And Mel Gibson's shotgun shells were priceless in that movie...


On Jan 19 11:48 AM lance sjogren wrote:

>
> People decry gold bugs as beeing doomsters, but as the REAL doomsters
> have pointed out, if things get really bad, even gold will be worthless,
> since it has no intrinsic utility.
>
> So the real doomers are those who say buy bullets and beans.
>
> In my view, if things get as bad as they fear, even that strategy
> won't do much, it might buy you and extra few days or weeks of survival
> before you perish along with the rest of us. And, if the world gets
> that bad, I think it will be a world that will be so gruesome that
> we will welcome death.
>
> I don't think it will get that bad, but the point is that under a
> worst-case scenario, no strategy is going to do you much good.

How the Treasury Bubble Will Burst and Why

This article claims that "[As rates approach zero] Treasury Bills and cash have the same benefit profile but not the same safety and liquidity profile."

This couldnt be further for the truth. If you have several billions of dollars in cash (like a foreign government or a corporation), then the safety and liquidity profile of holding cash is far, far riskier then the chances of the government defaulting on 0% T-bills. Where is one to store the physical paper dollars? Put it in a bank, and the bank could go under and wipe out your holdings. Build your own vault with 24-hour security (at siginificant cost)? If you're China, do you run billions of dollars on a ship across the Pacific? Gold has even more of these logistics challenges. Holding the money in short-term T-Bills is a no brainer.