Thursday, January 05, 2012

Chart of the Day: Three-Month T-Bills

The chart above shows 3-month T-bill rates back to 1934, and shows an interesting historical, full-circle pattern: from zero in the 1930s to a 16% peak around 1980, back to zero again in 2011.

14 Comments:

At 1/05/2012 7:35 PM, Blogger Benjamin said...

Inflation!! Inflation!!!!

Except the market says maybe deflation. Beginning to look like Japan, no?

 
At 1/06/2012 6:12 AM, Blogger rjs said...

OK, why?

i always sensed that the oil price spike, & the Fed response, had a lot to do with it...

 
At 1/06/2012 6:49 AM, Blogger geoih said...

Quote from Benjamin: "Inflation!! Inflation!!!!"

Why would there be inflation on something that most percieve will be worthless in a few years?

You want to see inflation? Look at the stock market.

 
At 1/06/2012 6:49 AM, Blogger geoih said...

Quote from Benjamin: "Inflation!! Inflation!!!!"

Why would there be inflation on something that most percieve will be worthless in a few years?

You want to see inflation? Look at the stock market.

 
At 1/06/2012 8:14 AM, Blogger Larry G said...

so....the govt does not have to offer any interest to attract purchasers of T-bills?

It's pretty bad when people say "here, take my money and no I don't need any interest", eh?

gee..you'd think that with a 1.5 trillion structural deficit, 15 trillion in debt and 70 trillion in unfunded liabilities that no one would dare loan the govt more money, eh?

 
At 1/06/2012 10:11 AM, Blogger VangelV said...

The chart says fear is growing. People are so scared that they are selling off houses and stocks to buy gold and treasuries. That said, unemployment rates today are very similar to what the US had in the 1930s so there is another parallel to look at.

 
At 1/06/2012 10:14 AM, Blogger Larry G said...

geeze Van... are you actually EQUATING GOLD with T-bills?

GAWD!

 
At 1/06/2012 10:47 AM, Blogger VangelV said...

geeze Van... are you actually EQUATING GOLD with T-bills?

GAWD!


That is not what I said. I pointed out that fear has made people sell equities and run to Treasuries and gold.

 
At 1/06/2012 11:08 AM, Blogger morganovich said...

vangel is correct.

this t-bill rate is a sign of fear, not inflationary expectations.

a t-bill has government backing. a large cash deposit does not.

to be considered "cash" on a corporate balance sheet, you need a duration of under 1 year.

thus, a fear of banks leads to a flood into t-bills.

it's really that simple.

add in massive buying from the fed making the rest of the yield curve unattractive (real interest rates are negative for the whole curve using current CPI) and you get t-bills getting used like bank deposits and yielding the same interest.

 
At 1/06/2012 11:38 AM, Blogger Benjamin said...

Market Monetarism is the solution to European and USA economic woes.

Theo-monetarism, as practiced, is resulting in recessionary deflations, and a Japan-like economy.

Japan has an extremely strong yen. japan has had 15 percent deflation in the last 20 years. Japan's manufacturing output has fallen 20 percent in that time period, while stock and equity markets cratered by 80 percent. You call that theo-monetarism. A faith that tight money works, despite abundant empirical evidence to the contrary.

 
At 1/06/2012 12:10 PM, Blogger morganovich said...

benji-

you keep trotting out this same misunderstanding of japan over and over. have you ever looked at the data?

all the best growth for 20 years has corresponded with yen strength, not weakness.

their problem was NOT monetary.

it was demographics, a debt bubble, and zombie banks.

best period of japanese growth in 20 years?

2007-present.

strongest yen rally in the last 20 years?

2007-present.


is there some point at which you will actually look at the facts here?

you do not have a leg to stand on with this repeated argument.

you are also using a ridiculous straw man.

tight money?

there is nothing like tight money in the us.

interest rates are zero.

the fed is injecting cash in unprecedented levels through bond purchases.

but it's all pushing on a string.

this is a demand problem, not one of supply.

no matter how many 8-track players you manufactured, it would not drive sales.

you could make 100 million. supply would not be tight. but demand would be low. you are mistaking the latter for "tight money".

money can work the same way.

if there is no demand, upping supply accomplishes nothing.

you have this cargo cult idea that if money supply grows, the economy grows, but there is no evidence at all that such is the case. the causality goes the other way, and more than any time in the past, increased velocity can take up liquidity needs.

ti strikes me as odd that you describe yourself as a "free marketer" yet seem to feel that centralized management of the business cycle is the way to go.

you sounds like the policy experts from weimar.

 
At 1/06/2012 12:12 PM, Blogger geoih said...

Quote from Benjamin: "Market Monetarism is the solution to European and USA economic woes."

LOL!

 
At 1/06/2012 12:56 PM, Blogger Larry G said...

if T-bills are maxed/unavailable?

aren't T-bills limited to the authorized US debt?

 
At 1/06/2012 7:01 PM, Blogger VangelV said...

is there some point at which you will actually look at the facts here?


Benji would love to but that might set a precedent.

 

Post a Comment

Links to this post:

Create a Link

<< Home