Comments on economics, mystery fiction, drama, and art.

Monday, July 11, 2011

An investment opportunity?

The Treasury has been able to borrow at essentially a zero interest rate since September 2008. The most recent sale of 4-Week T-bills (July 7) required an interest rate of 0.03%. And that’s an annual rate. Someone buying $100 Million (redemption value) of T-bills paid $99,997,692 for them. That buyer will receive in interest payment of $2,308. On $100 Million worth of T-bills. During the 2001 recession, $100 Million in 4-Week T-bills would have yielded about $260,000 in interest…

Personally, I think the Treasury should start using the proceeds from the sale of T-bills to buy AAA corporate bonds. The profit opportunities are breathtaking.


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