Yes, a five-year Treasury is riskier than a T bill, because a rise in interest rates would hurt its price.
Indeed, using more sophisticated means, including comparing T-bill rates to interest on commercial paper, the authors conclude that default led to a persistent increase in T-bill rates and, therefore, higher borrowing costs for the federal government.
FORBES: The Day the United States Defaulted on Treasury Bills
Easy money will continue to keep real rates (or the T-bill rate less inflation) negative.
Zivney and Marcus examined what happened to T-bill interest rates as a result of this small, temporary default.
FORBES: The Last Time the United States Defaulted on Treasuries
"Obviously, this was not easy news to hear, and I didn't accept Bill's decision right away, " he said.
Doesn't the bill that was vetoed kick adults, parents off the program and, in fact, put them into Medicaid?
Whereas it can indeed, risk free, lend out money at the T-Bill rate.
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Institutions are also nervous, as very short-term T-bill rates have spiked, therefore causing the yield curve to flatten out.
The 100-Minus-Your-Age maxim applied when the 10-year T-bill paid out 9% or 10%, like it did in the 1980s.
Thus, the compensation for having to wait for the money should be that T-Bill rate: the available risk free return.
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T-bill rates spiked upwards four times in the months around the default.
FORBES: The Day the United States Defaulted on Treasury Bills
This volatility is the price we pay for returns above T-Bill rates.
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But that didn't stop Bill Gates from predicting its future Tuesday morning.
Right now, the yield on the 12-month T-bill is .25% and the rate of consumer inflation as purported by the government is about 1%.
As best as they can tell, T-bill interest rates increased about 60 basis points after the first default and remained elevated for at least several months thereafter.
FORBES: The Last Time the United States Defaulted on Treasuries
The most violent contraction in RGDP occurred during 4Q2008, when the average spread between the 90-day T-bill rate and the IOR rate was the greatest, at -0.83 percentage points.
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While the IOR rate has been constant at 0.25% since December 2008, the 90-day T-bill has fallen from an average of 0.14% in November 2010 (when QE2 commenced) to zero today.
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Each security there pays nearly double the benchmark T-bill.
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Consider: the 10-year Treasury pays about 1.9%, less than half what it paid five years ago. 100-Minus-Your-Age applied when the benchmark T-bill paid out 9% or 10%, like it did in the 1980s.
With the IOR rate far above the 90-day T-bill rate, banks had no incentive to do anything with the huge volume of newly created reserves other than to sit on them, and sit on them they did.
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Neither Prof Martin nor Mr Miles draw explicit conclusions for fiscal policy: they are not among those who are openly calling for Mr Osborne to move to a Plan B (though I don't think Bill Martin would oppose it).
Indeed, except for a few tv loudmouths and self-help salesmen, there's nobody on the list whose day job is to interpret real events. (We dropped a category for public speakers this year--that's why you don't see Bill Clinton--because it's such a static roster.) No matter: Click here to enjoy the names and faces as useful data points of a personality-obsessed era.
And a small business might wonder, I don't know how the energy bill is going to affect me, I don't know how the health care reform bill is going to affect me -- I'd better hold off on hiring.
Gephardt chastised the White House for aggressively pursuing moderate Republicans who have long supported the Norwood bill, portending political arguments if Republicans don't pass a bill before the long August recess.
"I don't mind having 'The Man' around--it's good to have a standard--and I wouldn't have a business if Bill Gates weren't out there getting incredibly rich, " Reeves says.
Cuomo, however, still hasn't released his bill which would require him to detail his position.
His family was very clear they hadn't stepped into Bill's shoes and that someone needed to.
For example, in the U.S. an app purchase can be put on a T-Mobile bill.
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