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Old 12-28-2011, 09:05 PM
 
31,387 posts, read 36,962,580 times
Reputation: 15038

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This morning, Bloomberg reported that investors' demand for Treasury bonds was the highest it's been since 1995. For taxpayers, the timing could not be better. The more banks, pension funds, and foreign countries clamor for Treasuries, the lower the interest rate our government has to pay. So in this age of gargantuan budget deficits, we're getting dirt-cheap loans to keep the lights on in Capitol Hill.

How cheap? According to Bloomberg, during an auction of short-term bonds last week, the Treasury received nine-times as many bids as it needed to sell off all its $30 billion worth of debt. The interest rate it offered: 0%.

Let me repeat that: The U.S. government can sell its debt without paying any interest at all. Zilch.
If Our Debt Is So Dangerous, Why Are People Begging for More? - Jordan Weissmann - Business - The Atlantic
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Old 12-28-2011, 09:17 PM
 
Location: it depends
6,369 posts, read 6,390,795 times
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Quote:
Originally Posted by ovcatto View Post
This morning, Bloomberg reported that investors' demand for Treasury bonds was the highest it's been since 1995. For taxpayers, the timing could not be better. The more banks, pension funds, and foreign countries clamor for Treasuries, the lower the interest rate our government has to pay. So in this age of gargantuan budget deficits, we're getting dirt-cheap loans to keep the lights on in Capitol Hill.

How cheap? According to Bloomberg, during an auction of short-term bonds last week, the Treasury received nine-times as many bids as it needed to sell off all its $30 billion worth of debt. The interest rate it offered: 0%.

Let me repeat that: The U.S. government can sell its debt without paying any interest at all. Zilch.
If Our Debt Is So Dangerous, Why Are People Begging for More? - Jordan Weissmann - Business - The Atlantic
Great post, Ovcatto. Tragic thing is, this stampede into treasuries will end like all stampedes: with big losses. Ultra low-rate long treasury bonds are every bit as stupid an investment as tech stocks in 2000, real estate in 2006, or tulip bulbs in 16th century Holland.
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Old 12-28-2011, 09:22 PM
 
Location: Great State of Texas
86,052 posts, read 84,281,002 times
Reputation: 27718
That's crazy..bonds are 30 years.
Must be a lot of scared folks out there.

That article has their types of Treasuries mixed up. 2-3-5-7-10 year are Notes, 30 year is Bonds.

I read "short term bonds" and went to the Treasury site to see if they had new offerings. They don't.

Individual - Treasury Securities & Programs

Then I looked up the last bond auction (12/15) and the yield is 2.35%
Recent Note, Bond, and TIPS Auction Results
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Old 12-29-2011, 09:37 AM
 
Location: Ohio
24,623 posts, read 19,089,918 times
Reputation: 21738
Quote:
Originally Posted by ovcatto View Post
Let me repeat that: The U.S. government can sell its debt without paying any interest at all. Zilch.
Uh, you do understand those are bonds, right?

I'll explain it this way.

There's a $500 bond.

You buy it.

You don't pay $500.

You pay $250.

When the bond matures, you get $500 or double your money.

Get it?

Okay, so you don't get any interest....but your money is doubled.

I didn't read the article, but I'd venture to guess that these are short-term bonds, probably 1-year T-Bills.

Think about it.....

You buy $50,000 worth of 1-year T-Bills and one year later....

...viola! you have $100,000.

You just got a 200% return in 1 year.

That's better than CATS!

Better than the stock market, no? Can you buy $50,000 worth of stocks and then sell them a year later and double your money?

Anyway, I hope you weren't implying that the American tax payers are off the hook here, because your government vis-a-vis the taxpayers are going to pay $60 Billion for the privilege of having $30 Billion in cash.
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Old 12-29-2011, 10:09 AM
 
20,622 posts, read 19,275,404 times
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Quote:
Originally Posted by Mircea View Post
U

I didn't read the article, but I'd venture to guess that these are short-term bonds, probably 1-year T-Bills.

.

Then it would be a junk article. T-Bill always sell at a discount and pay in full at maturity. They are always 0% rate from par value. The article also says treasury "bonds" which pay interest and mature at par.
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Old 12-29-2011, 10:18 AM
 
Location: Great State of Texas
86,052 posts, read 84,281,002 times
Reputation: 27718
That article is full of inaccuracies. There is no such thing as a short term Treasury bond.
Bonds are 30 years. And the last auction of the bond had a 2%+ YTM.
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