4-week T-bills now being auctioned for 0.000%
Apparently, market professionals are willing to accept short-term government paper at auction with no discount through four weeks (hat tip Matt Franko).
Wow! This despite the potential for an eventual default on August 2, two days before that four weeks is out.
Free money for the US government: that’s what zero rates and currency sovereignty mean.
this is an interesting development. it cannot be a coincidence that this is taking place as the debt ceiling nears. this is the best stop gap solution in the event the thespians in washington cannot find their way to resolution. all treasury needs to do is sell interest free bonds which in effect is another name for money. The fed reserve (or other private sector actors) can purchase these bonds and the money obtained can be used to keep the government running without having to undergo draconian cuts at a time of weak economic performance. all it is is an elaborate money swap. yet, this is a circuitous route. However, by having treasury now exchange non-interest bearing bonds for money (in effect, money for money), it would remove the long standing distortion of government going into debt because it had to borrow from private sources the very currency it alone has the legal right to issue.