Holding T-bills now pays 30x more than your bank savings account

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Six months ago, I alerted readers to the very attractive benefits that the TreasuryDirect program offers to investors who are defensively sitting on cash right now.

Since then, those benefits have continued to improve. Substantially.

Back in November, by holding extremely conservative short-term (i.e., 6-months or less) Treasury bills, TreasuryDirect participants were receiving over 16x more in interest payments vs keeping their cash in a standard bank savings account.

Today, they're now receiving over 30 times more. Without having to worry about the risk of a bank "bail-in" or failure.

So if you're holding cash right now and NOT participating in the TreasuryDirect program, do yourself a favor and read on. If you're going to pass on this opportunity, at least make it an 'eyes-wide-open' decision.

Holding Cash (In Treasurys) Now Beats The Market

There are many prudent reasons to hold cash in today's dangerously overvalued financial markets, as we've frequently touted here at PeakProsperity.com.

Well, there's now one more good reason to add to the list: holding cash in short-term Treasurys is now meeting/beating the dividend returns offered by the stock market:

"Cash Is King" Again - 3-Month Bills Yield More Than Stocks (Zero Hedge)
'Reaching for yield' just got a lot easier...
For the first time since February 2008, three-month Treasury bills now have a yield advantage over the S&P; 500 dividend yield (and dramatically lower risk).
Investors can earn a guaranteed 1.90% by holding the 3-month bills or a risky 1.89% holding the S&P; 500...

The longest period of financial repression in history is coming to an end...

And it would appear TINA is dead as there is now an alternative.

And when you look at the total return (dividends + appreciation) of the market since the start of 2018, stocks have returned only marginally better than 3-month Treasurys. Plus, those scant few extra S&P; points have come with a LOT more risk.

Why take it under such dangerously overvalued conditions?

If You Can't Beat 'Em, Join 'Em

In my June report Less Than Zero: How The Fed Killed Saving, I explained how the Federal Reserve's policy of holding interest rates at record lows has decimated savers. Those who simply want to park money somewhere "safe" can't do so without losing money in real terms.

To drive this point home: back in November, the average interest rate being offered in a US bank savings account was an insutling 0.06%. Six months later, nothing has changed:

(Source

That's virtually the same as getting paid 0%. But it's actually worse than that, because once you take inflation into account, the real return on your savings is markedly negative.

And to really get your blood boiling, note that the Federal Reserve has rasied the federal funds rate it pays banks from 1.16% in November to 1.69% in April. Banks are now making nearly 50% more money on the excess reserves they park at the Fed -- but are they passing any of that free profit along to their depositors? No....

This is why knowing about the TreasuryDirect program is so important. It's a way for individual investors savvy enough to understand the game being played to bend some of its rules to their favor and limit the damage they suffer.

Below is an updated version (using today's rates) of my recap of TreasuryDirect, which enables you to get over 30x more interest on your cash savings than your bank will pay you, with lower risk.

TreasuryDirect

For those not already familiar with it, TreasuryDirect is a service offered by the United States Department of the Treasury that allows individual investors to purchase Treasury securities such as T-Bills, notes and bonds directly from the U.S. government.

You purchase these Treasury securities by linking a TreasuryDirect account to your personal bank account. Once linked, you use your cash savings to purchase T-bills, etc from the US Treasury. When the Treasury securities you've purchased mature or are sold, the proceeds are deposited back into your bank account.

So why buy Treasuries rather than keep your cash savings in a bank? Two main reasons:

  • Much higher return: T-Bills are currently offering an annualized return rate between 1.66-2.04%. Notes and bonds, depending on their duration, are currently offering between 2.6% - 3.1%
  • Extremely low risk: Your bank can change the interest rate on your savings account at any time -- with Treasury bills, your rate of return is locked in at purchase. Funds in a bank are subject to risks such as a bank bail-in or the insolvency of the FDIC depositor protection program -- while at TreasuryDirect, your funds are being held with the US Treasury, the institution with the lowest default risk in the country for reasons I'll explain more in a moment.

Let's look at a quick example. If you parked $100,000 in the average bank savings account for a full year, you would earn $60 in interest. Let's compare this to the current lowest-yielding TreasuryDirect option: continuously rolling that same $100,000 into 4-week T-Bills for a year:

  1. Day 1: Funds are transferred from your bank account to TreasuryDirect to purchase $100,000 face value of 4-week T-Bills at auction yielding 1.68%
  2. Day 28: the T-Bills mature and the Treasury holds the full $100,000 proceeds in your TreasuryDirect account. Since you've set up the auto-reinvestment option, TreasuryDirect then purchases another $100,000 face value of 4-week T-Bills at the next auction.
  3. Days 29-364: the process repeats every 4 weeks
  4. Day 365: assuming the average yield for T-Bills remained at 1.68%, you will have received $1,680 in interest in total throughout the year from the US Treasury.

$1,680 vs $60. That's a 27x difference in return.

And the comparison only improves if you decide to purchase longer duration (13-week or 26-week) bills instead of the 4-week ones:

Repeating the above example for a year using 13-week bills would yield $1,925. Using 26-week bills would yield $2,085. A lot better (34x better!) than $60.

Opportunity Cost & Default Risk

So what are the downsides to using TreasuryDirect? There aren't many.

The biggest one is opportunity cost. While your money is being held in a T-Bill, it's tied up at the US Treasury. If you suddenly need access to those funds, you have to wait until the bill matures.

But T-Bill durations are short. 4 weeks is not a lot of time to have to wait. (If you think the probability is high you may to need to pull money out of savings sooner than that, you shouldn't be considering the TreasuryDirect program.)

Other than that, TreasuryDirect offers an appealing reduction in risk.

If your bank suddenly closes due to a failure, any funds invested in TreasuryDirect are not in your bank account, so are not subject to being confiscated in a bail-in.

Instead, your money is held as a T-Bill, note or bond, which is essentially an obligation of the US Treasury to pay you in full for the face amount. The US Treasury is the single last entity in the country (and quite possibly, the world) that will ever default on its obligations. Why? Because Treasurys are the mechanism by which money is created in the US. Chapter 8 from The Crash Course explains:

As a result, to preserve its ability to print the money it needs to function, the US government will bring its full force and backing to bear in order to ensure confidence in the market for Treasurys.

Meaning: the US government won't squelch on paying you back the money you lent it. If required, it will just print the money it needs to repay you.

So, How To Get Started?

Usage of TreasuryDirect is quite low among investors today. Many are unaware of the program. Others simply haven't tried it out.

And let's be real: it's crazy that we live in a world where a 1.68-2.09% return now qualifies as an exceptionally high yield on savings. A lot of folks just can't get motivated to take action by rates that low. But that doesn't mean that they shouldn't -- money left on the table is money forfeited.

So, if you're interested in learning more about the TreasuryDirect program, start by visiting their website. Like everything operated by the government, it's pretty 'no frills'; but their FAQ page addresses investors' most common questions.

Before you decide whether or not to fund an account there, be sure to discuss the decision with your professional financial advisor to make sure it fits well with your personal financial situation and goals. (If you're having difficulty finding a good one, consider scheduling a free discussion with PeakProsperity.com's endorsed financial advisor -- who has considerable experience managing TreasuryDirect purchases for many of its clients).

In Part 2: A Primer On How To Use TreasuryDirect, we lay out the step-by-step process for opening, funding and transacting within a TreasuryDirect account. We've created it to be a helpful resource for those self-directed individuals potentially interested in increasing their return on their cash savings in this manner.

Yes, we savers are getting completely abused by our government's policies. So there's some poetic justice in using the government's own financing instruments to slightly lessen the sting of the whip.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

NOTE: PeakProsperity.com does not have any business relationship with the TreasuryDirect program. Nor is anything in the article above to be taken as an offer of personal financial advice. As mentioned, discuss any decision to participate in TreasuryDirect with your professional financial advisor before taking action.

As the nation soaks in the victory of the recent passing of the historic First Step Act, there are Congressmen who haven't stopped working to solve additional problems with the criminal justice system. Because while the Act was impactful, leading to the well-deserved early release of many incarcerated individuals, it didn't go far enough. That's why four Congressmen have joined forces to reintroduce the Justice Safety Valve Act—legislation that would grant judges judicial discretion when determining appropriate sentencing.

There's a real need for this legislation since it's no secret that lawmakers don't always get it right. They may pass laws with good intentions, but unintended consequences often prevail. For example, there was a time when the nation believed the best way to penalize lawbreakers was to be tough on crime, leading to sweeping mandatory minimum sentencing laws implemented both nationally and statewide.

RELATED: If Trump can support criminal justice reform, so can everyone else

Only in recent years have governments learned that these sentences aren't good policy for the defendant or even the public. Mandatory minimum sentences are often overly harsh, don't act as a public deterrent for crime, and are extremely costly to taxpayers. These laws tie judges' hands, preventing them from using their knowledge and understanding of the law to make case relevant decisions.

Because legislation surrounding criminal law is often very touchy and difficult to change (especially on the federal level, where bills can take multiple years to pass) mandatory minimum sentences are far from being done away with—despite the data-driven discoveries of their downfalls. But in order to solve the problems inherent within all of the different laws imposing sentencing lengths, Congress needs to pass the Justice Safety Valve Act now. Ensuring its passing would allow judges to use discretion while sentencing, rather than forcing them to continue issuing indiscriminate sentences no matter the unique facts of the case.

Rather than take years to go back and try to fix every single mandatory minimum law that has been federally passed, moving this single piece of legislation forward is the best way to ensure judges can apply their judgment in every appropriate case.

When someone is facing numerous charges from a single incident, mandatory minimum sentencing laws stack atop one another, resulting in an extremely lengthy sentence that may not be just. Such high sentences may even be violations of an individual's eighth amendment rights, what with the imposition of cruel and unusual punishment. It's exactly what happened with Weldon Angelos.

In Salt Lake City in 2002, Weldon sold half a pound of marijuana to federal agents on two separate occasions. Unbeknownst to Weldon, the police had targeted him because they suspected he was a part of a gang and trafficking operation. They were oh-so-wrong. Weldon had never sold marijuana before and only did this time because he was pressured by the agents to find marijuana for them. He figured a couple lowkey sales could help out his family's financial situation. But Weldon was caught and sentenced to a mandatory 55 years in prison. This massive sentence is clearly unjust for a first time, non-violent crime, and even the Judge, Paul Cassell, agreed. Judge Cassell did everything he could to reduce the sentence, but, due to federal law, it wasn't much.

The nation is facing an over-criminalization problem that costs taxpayers millions and amounts to the foolish eradication of individual liberties.

In cases like Weldon's, a safety valve for discretionary power is much needed. Judges need the ability to issue sentences below the mandatory minimums, depending on mitigating factors such as mental health, provocation, or physical illness. That's what this new bill would allow for. Critics may argue that this gives judges too much power, but under the bill, judges must first make a finding on why it's necessary to sentence below the mandatory minimum. Then, they must write a clear statement explaining their decision.

Judges are unlikely to risk their careers to allow dangerous criminals an early release. If something happens after an offender is released early, the political pressure is back on the judge who issued the shorter sentence—and no one wants that kind of negative attention. In order to avoid risky situations like this, they'd use their discretion very cautiously, upholding the oath they took to promote justice in every case.

The nation is facing an overcriminalization problem that costs taxpayers millions and amounts to the foolish eradication of individual liberties. Mandatory minimums have exacerbated this problem, and it's time for that to stop. Congresswomen and men have the opportunity to help solve this looming problem by passing the Justice Safety Valve Act to untie the hands of judges and restore justice in individual sentences.

Molly Davis is a policy analyst at Libertas Institute, a free market think tank in Utah. She's a writer for Young Voices, and her work has previously appeared in The Hill, TownHall.com, and The Washington Examiner.

New gadget for couples in 'the mood' lets a button do the talking

Photo by Matt Nelson on Unsplash

Just in time for Valentine's Day, there's a new romantic gadget for couples that is sure to make sparks fly. For those with their minds in the gutter, I'm not talking about those kinds of gadgets. I'm talking about a brilliant new device for the home called "LoveSync."

This is real — it's a simple pair of buttons for busy, modern couples who have plenty of time for social media and Netflix, but can't quite squeeze in time to talk about their... uh... special relationship.

Here's how it works. Each partner has their own individual LoveSync button. Whenever the mood strikes one partner, all they have to do is press their own button. That sets their button aglow for a certain period of time. If, during that time window, their partner also presses their own button, then both buttons light up in a swirling green pattern to signal that love has "synced"...and it's go time.

According to the makers of LoveSync, this device will "Take the Luck out of Getting Lucky." It brings a whole new meaning to "pushing each other's buttons." It's an ideal gift to tell your significant other "I care," without actually having to care, or talk about icky things like feelings.

If you find your significant other is already on the couch binge-watching The Bachelor, no problem! You can conveniently slink back to your button and hold it in for four seconds to cancel the desire. No harm, no foul! Live to fight another day.

Have fun explaining those buttons to inquiring children.

No word yet on whether LoveSync can also order wine, light candles or play Barry White. Maybe that's in the works for LoveSync 2.0.

Of course, LoveSync does have some pitfalls. Cats and toddlers love a good button. That'll be a fun conversation — "Honey, who keeps canceling my mood submissions?" And have fun explaining those buttons to inquiring children. "Yeah, kids, that button just controls the lawn sprinklers. No big deal."

If you've been dialing it in for years on Valentine's Day with flowers and those crappy boxes of chocolate, now you can literally dial it in. With a button.

Good luck with that.

The social power of 'Reddit' is helping teens of anti-vaxxers get vaccinated

Noam Galai/Getty Images for TechCrunch

Reddit certainly earns its motto as "the front page of the internet," with roughly 540 million visitors monthly, the third most-visited website in the U.S., sixth worldwide. Unlike Twitter and Facebook, Reddit is a largely anonymous platform. People's faces are masked, their names are disguised. Which makes their hidden humanity all the more impactful.

On Reddit, both news and serious information are threaded in among gifs of cats and posts about Call of Duty, but that doesn't make it any less important. For many people, Reddit signifies the town hall where news is passed along or stomped into obscurity.

It gives you a healthy read of our society as a whole.

RELATED: Forget Rabies, 'Woke' Hipsters in Brooklyn Skipping Vaccines to Prevent 'Dogtism'

A recent Pew Poll found that Reddit leans left politically at a rate higher than the general public. Most users are young men, whose extensive internet use gives them a gatekeeping authority over what information should be considered important. From there, it spreads through the rest of the internet and helps shape public opinion.

So, it makes a lot of sense that Reddit has become a sort of makeshift safe place for children who grew up with parents who refused to give them vaccinations. Of course, Reddit also vehemently mocks the anti-vaccination folks, for better or for worse, often the latter, but that's a subject for another day.

The Daily Dot recently published an article on this strange intersection of ideology and nerd culture. "Desperate teens of anti-vaxxers are turning to Reddit for vaccination advice."

The article follows Ethan, whose parents are staunchly against vaccinations:

But Ethan is not his parents. When he turned 18, he decided to take matters into his own hands. He wasn't sure where else to begin, so he turned to Reddit.

Where do I go to get vaccinated? Can I get vaccinated at my age?" Ethan asked his fellow redditors in December. Ethan's post flooded with over 1,000 comments from users offering their encouragement and support, along with practical advice. "Good on you for getting your vaccinations," one user responded. "It's never too late and you're not only protecting yourself but those around you who truly can't get vaccinated.

Ethan told the Daily Dot that some redditors even offered to give him money via GoFundMe or PayPal if insurance didn't cover the shots. "People were really supportive, and that was really cool," he said. "I had the blessing of Reddit. They were supporting me on a decision my mom freaked out about." Ethan is not alone. "More and more teens are turning to places like Reddit to seek out information on where and how to get vaccinated, and if it's too late."

Whatever your opinion on vaccinations, there's a positive message to all of this. A human message. Hopeful. Proof that, in an increasingly caustic world, people can turn to one another in times of need.

Whatever your opinion on vaccinations, there's a positive message to all of this. A human message. Hopeful.

Now more than ever, that is crucial.

Given the social power of Reddit, it is often characterized as a tool for politicians or political movements. Throughout the forum, various political ideologies gather and organize like factions in some ideological war. A political thread on Reddit is like a Facebook comment section at its most hostile, arrogant or confident, but with no identities attached to the attacks, rants or opinions. When you find yourself riled into a debate, it's easy to wonder who's behind the replies, especially the more vicious ones.

People often characterize it as a hive-mind message board full of circlejerk memes and jokes about SpongeBob. This description isn't entirely wrong, but it is shallow and incomplete. At its core, Reddit is humane. Its users, for the most part, are compassionate. If it were an experiment on human nature, the results would be gratifying.