U.S. Treasury three-month bill rates dropped to the lowest since World War II as a loss of confidence in credit markets worldwide prompted investors to abandon higher-yielding assets for the safety of the shortest- term government securities.
Investors pushed down the rate to 0.0203 percent on concern that credit market losses will widen after the bankruptcy of Lehman Brothers Holdings Inc. and the federal takeover of American International Group Inc. In a sign of banks' reluctance to lend, the rates charged for short-term loans relative to U.S. bill rates rose to the highest on record.
Short-term rates basically MAKE the value of money in the foreign exchange markets. And yet with short-term rates at almost ZERO, here's the effect on the dollar:
Yes, it is back to the Monday morning opening price.
Lowest short-term rates since WW2, and the value of the dollar goes down to where it was all of Monday morning.
That's basically BANKERS saying: "we are so scared right now that we will give you all the dollars you want as long as you simply promise to pay us back what we gave you - no interest."
That is a statement that right now the ONLY thing serious people trust in the developed world is the United States Treasury bond.
I was so cheerful this morning. With AIG was bailed out and I thought maybe crisis was averted. I want change in this country and the world. I KNOW the changes we need and, interestingly, we are heading there - fast.
But I never expected - or wanted - for it to happen like this.
I think we cannot but surmise that The Crash has already happened and we are just sitting here, waiting for the tsunami.
May you live in times of great interest - or at least more than 0.3%
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