Treasuries for the Little Guy

Posted on 04. Oct, 2005 by in News

The Wall Street Journal reported today the opening of a website set up by the Treasury Department that will allow individual investors to purchase, manage, and redeem Treasury bonds, bills, and notes. The site, www.treasurydirect.com, was created to expand the initial Treasury market from institutional investors or paper accounts to anyone with the Internet.

“U.S. Treasurys are considered the safest investments for individuals, as they are backed by the full faith and credit of the U.S. government. What’s more, any interest earned on Treasurys is exempt from state and local income taxes.”

To open a new account is as easy as providing some banking information and identification. The opening of this site is not exactly groundbreaking – but the timing of its launch is interesting to note. The only reason I bring this to your attention is to back up my belief that money does not appear out of thin air. Let me explain…

After the terrible destruction along the gulf coast President Bush announced that the Federal Government would provide $200 billion in aid. In the same breath he also promised that he wouldn’t raise taxes to provide the additional relief, but that programs would be cut and spending reigned in. Now you and I both know that cutting spending is about as easy as building a working space shuttle, so we have to ask ourselves “Where is the money really going to come from?”

As soon as Bush made that statement I knew that Bonds would be the answer. After all, an increase in the supply of bonds would drive the prices of bonds down as a result of increased interest rates. It’s really a win-win situation for the government because Bush raises the money he needs for Katrina aid, and Greenspan increases interest rates to curb the rediculous amount of borrowing that Americans are doing with absolutely no equity.

Now you can image why I was not at all suprised at the launch of the Treasury Department’s new site – making it easier for anyone to purchase government Treasuries. By making it easier for you and me to purchase bonds for ourselves and as gifts, the government can sell the amount of bonds it will need to raise money for relief effort and raise interest rates.

One Response to “Treasuries for the Little Guy”

  1. So Lost

    04. Oct, 2005

    Just surfing through from Blog Explosion and wanted to say hi!

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