As for the Treasury bills, dumping them is not an option for China: a tumbling dollar would hurt its own economy (see article).
The key insight is that it is perfectly possible for the Fed to buy trillions and trillions of dollars of assets other than Treasury bills or for other central banks to take corresponding actions if that is what it takes.
It's made no such promises for most of its official Treasury bills and bonds.
Since 1992, the Canadian Investment Dealers Association has been trying to create a real-time price-information system for Canadian government bonds and treasury bills.
The only difference is that the Fed issues money rather than treasury bills in exchange for its purchases.
It is also money the country has already borrowed by issuing bonds and treasury bills to pay for programs we have funded in the past.
Since 1926 stocks have returned approximately 10% annualized and Treasury bills (a proxy for the so-called risk-free rate) have returned 4%.
Investors fleeing from risk drove the dollar up and pushed the yield on one-month Treasury bills into negative territory for the first time in ten months.
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For fixed-income investments like bonds and Treasury bills, inflation is of course a huge threat.
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When Congress engages in deficit spending the Treasury auctions off T-Bills to pay for it.
There is no way to eliminate risk from a bond portfolio without settling for the puny 1.7% yield available on Treasury bills.
And as the Treasury minister responsible for controlling spending, he has allowed welfare bills to rise.
In those days U.S. Treasury bills and bonds were not acceptable as collateral for note issuance at the reserve banks.
The average equity fund investor had returns of only 4.48% worse than Treasury bills which returned 4.49% annually for the same time period.
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What to do, if you are bearish on interest rates but unwilling to settle for the less than 1% you can get on safe Treasury bills?
In America in the 1930s, Treasury bills yielded less than 0.5% for most of the decade, yet America's economic rebound over that period was one of the strongest-ever peacetime expansions and Treasury yields drifted lower.
ING, for instance, wants to sell local debt instruments, like Brazilian treasury bills, to foreign investors.
U.S. Treasury bills returned only 3.7% a year for the period.
It's why there is a ferocious Whitehall row going on about new green energy targets: the Treasury fears they will drive up bills still further whilst the Department for Energy and Climate Change (DECC) insists they will create green jobs for the future.
Currently, the Treasury yield curve ranges from 0.11% for 3-month T-bills, to 2.85% for 30-year T-bonds.
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Instead it will probably provide Treasury bills, or very short term loans, which are a proxy for cash, because otherwise it thinks that the scheme could complicate the way it controls the amount of money in the economy (monetary policy) in some unspecified way.
The nation actually reached its debt ceiling yesterday and, while the Treasury Department says that it can continue to pay outstanding debt obligations and other bills for another two months, there will need to be an all new debt ceiling battle in Congress beginning in February to allow the nation to continuing making payments on its debt obligations.
With 10-year Treasury bills offering pitiful yields, a lot of investors are no doubt perusing the charts for big, solid companies offering hearty dividends.
For example, if you have 20 years until retirement, investing your 401(k) plan into treasury bills, might not provide you with the return necessary to grow your wealth.
Carmen Reinhart of the Peterson Institute for International Economics and Belen Sbrancia of the University of Maryland calculate that average real rates on deposits and Treasury bills were negative throughout the 1945-80 period in advanced economies.
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Italy saw a sign of relief for its economy that has been flashing red on Wednesday, when an auction of its short-term Treasury-bills sold at lower borrowing costs and higher demand.
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