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

May 22, 2018

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Peak Prosperity

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:

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%
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.
Days 29-364: the process repeats every 4 weeks
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.

Washington Post EXPOSED: How Watergate editors almost published a fake Pulitzer Prize-winning story

Episode 6 of Glenn’s new history podcast series The Beck Story releases this Saturday.

This latest installment explores the history of Left-wing bias in mainstream media. Like every episode of this series, episode 6 is jam-packed with historical detail, but you can’t squeeze in every story, so some inevitably get cut from the final version. Part of this episode involves the late Ben Bradlee, who was the legendary editor of the Washington Post. Bradlee is legendary mostly because of the Watergate investigation that was conducted on his watch by two young reporters named Bob Woodward and Carl Bernstein. Bradlee, Woodward, and Bernstein became celebrities after the release of the book and movie based on their investigation called All the President’s Men.

But there is another true story about the Washington Post that you probably won’t see any time soon at a theater near you.

In 1980, Washington Post editor Ben Bradlee wanted to expand the Post’s readership in the black community. The paper made an effort to hire more minority journalists, like Janet Cooke, a black female reporter from Ohio. Cooke was an aggressive reporter and a good writer. She was a fast-rising star on a staff already full of stars. The Post had a very competitive environment and Cooke desperately wanted to win a Pulitzer Prize.

Readers were hooked. And outraged.

When Cooke was asked to work on a story about the D.C. area’s growing heroin problem, she saw her chance to win that Pulitzer. As she interviewed people in black neighborhoods that were hardest hit by the heroin epidemic, she was appalled to learn that even some children were heroin addicts. When she learned about an eight-year-old heroin addict named Jimmy, she knew she had her hook. His heartbreaking story would surely be her ticket to a Pulitzer.

Cooke wrote her feature story, titling it, “Jimmy’s World.” It blew away her editors at the Post, including Bob Woodward, who by then was Assistant Managing Editor. “Jimmy’s World” would be a front-page story:

'Jimmy is 8 years old and a third-generation heroin addict,' Cooke’s story began, 'a precocious little boy with sandy hair, velvety brown eyes and needle marks freckling the baby-smooth skin of his thin brown arms. He nestles in a large, beige reclining chair in the living room of his comfortably furnished home in Southeast Washington. There is an almost cherubic expression on his small, round face as he talks about life – clothes, money, the Baltimore Orioles and heroin. He has been an addict since the age of 5.'

Readers were hooked. And outraged. The mayor’s office instructed the police to immediately search for Jimmy and get him medical treatment. But no one was able to locate Jimmy. Cooke wasn’t surprised. She told her editors at the Post that she had only been able to interview Jimmy and his mother by promising them anonymity. She also revealed that the mother’s boyfriend had threatened Cooke’s life if the police discovered Jimmy’s whereabouts.

A few months later, Cooke’s hard work paid off and her dream came true – her story was awarded the Pulitzer Prize for feature writing. Cooke had to submit some autobiographical information to the Prize committee, but there was a slight snag. The committee contacted the Post when they couldn’t verify that Cooke had graduated magna cum laude from Vassar College. Turns out she only attended Vassar her freshman year. She actually graduated from the University of Toledo with a B.A. degree, not with a master’s degree as she told the Pulitzer committee.

Cooke’s editors summoned her for an explanation. Unfortunately for Cooke and the Washington Post, her resume flubs were the least of her lies. After hours of grilling, Cooke finally confessed that “Jimmy’s World” was entirely made up. Jimmy did not exist.

The Pulitzer committee withdrew its prize and Cooke resigned in shame. The Washington Post, the paper that uncovered Watergate – the biggest political scandal in American history – failed to even vet Cooke’s resume. Then it published a front-page, Pulitzer Prize-winning feature story that was 100 percent made up.

Remarkably, neither Ben Bradlee nor Bob Woodward resigned over the incident. It was a different time, but also, the halo of All the President’s Men probably saved them.

Don’t miss the first five episodes of The Beck Story, which are available now. And look for Episode 6 this Saturday, wherever you get your podcasts.

5 Democrats who have endorsed Kamala (and two who haven't)

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With Biden removed from the 2024 election and only a month to find a replacement before the DNC, Democrats continue to fall in line and back Vice President Kamala Harris to headline the party's ticket. Her proximity and familiarity with the Biden campaign along with an endorsement from Biden sets Harris up to step into Biden's shoes and preserve the momentum from his campaign.

Glenn doesn't think Kamala Harris is likely to survive as the assumed Democratic nominee, and once the DNC starts, anything could happen. Plenty of powerful and important Democrats have rallied around Harris over the last few days, but there have been some crucial exemptions. Here are five democrats that have thrown their name behind Harris, and two SHOCKING names that didn't...

Sen. Dick Durbin: ENDORSED

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High-ranking Senate Democrat Dick Durbin officially put in his support for Harris in a statement that came out the day after Biden stepped down: “I’m proud to endorse my former Senate colleague and good friend, Vice President Kamala Harris . . . our nation needs to continue moving forward with unity and not MAGA chaos. Vice President Harris was a critical partner in building the Biden record over the past four years . . . Count me in with Kamala Harris for President.”

Michigan Gov. Whitmer: ENDORSED

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The Monday after Biden stepped down from the presidential VP hopeful, Gretchen Whitmer released the following statement on X: “Today, I am fired up to endorse Kamala Harris for president of the United States [...] In Vice President Harris, Michigan voters have a presidential candidate they can count on to focus on lowering their costs, restoring their freedoms, bringing jobs and supply chains back home from overseas, and building an economy that works for working people.”

Rep. Alexandria Ocasio-Cortez: ENDORSED

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Mere hours after Joe Biden made his announcement, AOC hopped on X and made the following post showing her support: "Kamala Harris will be the next President of the United States. I pledge my full support to ensure her victory in November. Now more than ever, it is crucial that our party and country swiftly unite to defeat Donald Trump and the threat to American democracy. Let’s get to work."

Rep. Nancy Pelosi: ENDORSED

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Former Speaker Nancy Pelosi, who is arguably one of the most influential democrats, backed Harris's campaign with the following statement given the day after Biden's decision: “I have full confidence she will lead us to victory in November . . . My enthusiastic support for Kamala Harris for President is official, personal, and political.”

Sen. Elizabeth Warren: ENDORSED

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Massasschesets Senator Elizabeth Warren was quick to endorse Kamala, releasing the following statement shortly after Harris placed her presidential bid: "I endorse Kamala Harris for President. She is a proven fighter who has been a national leader in safeguarding consumers and protecting access to abortion. As a former prosecutor, she can press a forceful case against allowing Donald Trump to regain the White House. We have many talented people in our party, but Vice President Harris is the person who was chosen by the voters to succeed Joe Biden if needed. She can unite our party, take on Donald Trump, and win in November."

Former President Barack Obama: DID NOT ENDORSE

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Former President Barack Obama wasted no time releasing the following statement which glaringly omits any support for Harris or any other candidate. Instead, he suggests someone will be chosen at the DNC in August: "We will be navigating uncharted waters in the days ahead. But I have extraordinary confidence that the leaders of our party will be able to create a process from which an outstanding nominee emerges. I believe that Joe Biden's vision of a generous, prosperous, and united America that provides opportunity for everyone will be on full display at the Democratic Convention in August. And I expect that every single one of us are prepared to carry that message of hope and progress forward into November and beyond."

Prominent Democratic Donor John Morgan: DID NOT ENDORSE

AP Photo/John Raoux

Prominent and wealthy Florida lawyer and democrat donor John Morgan was clearly very pessimistic about Kamala's odds aginst Trump when he gave the following statement: “You have to be enthusiastic or hoping for a political appointment to be asking friends for money. I am neither. It’s others turn now . . . The donors holding the 90 million can release those funds in the morning. It’s all yours. You can keep my million. And good luck . . . [Harris] would not be my first choice, but it’s a done deal.”

How did Trump's would-be assassin get past Secret Service?

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Editor's Note: This article was originally published on TheBlaze.com.

Former President Donald Trump on Saturday was targeted in an assassination attempt during a campaign rally in Pennsylvania. It occurred just after 6:10 p.m. while Trump was delivering his speech.

Here are the details of the “official” story. The shooter was Thomas Matthew Crooks. He was 20 years old from Bethel Park, Pennsylvania. He used an AR-15 rifle and managed to reach the rooftop of a nearby building unnoticed. The Secret Service's counter-response team responded swiftly, according to "the facts," killing Crooks and preventing further harm.

Did it though? That’s what the official story says, so far, but calling this a mere lapse in security by Secret Service doesn't add up. There are some glaring questions that need to be answered.

If Trump had been killed on Saturday, we would be in a civil war today. We would have seen for the first time the president's brains splattered on live television, and because of the details of this, I have a hard time thinking it wouldn't have been viewed as JFK 2.0.

How does someone sneak a rifle onto the rally grounds? How does someone even know that that building is there? How is it that Thomas Matthew Crooks was acting so weird and pacing in front of the metal detectors, and no one seemed to notice? People tried to follow him, but, oops, he got away.

How could the kid possibly even think that the highest ground at the venue wouldn't be watched? If I were Crooks, my first guess would be, "That’s the one place I shouldn't crawl up to with a rifle because there's most definitely going to be Secret Service there." Why wasn't anyone there? Why wasn't anyone watching it? Nobody except the shooter decided that the highest ground with the best view of the rally would be the greatest vulnerability to Trump’s safety.

Moreover, a handy ladder just happened to be there. Are we supposed to believe that nobody in the Secret Service, none of the drones, none of the things we pay millions of dollars for caught him? How did he get a ladder there? If the ladder was there, was it always there? Why was the ladder there? Secret Service welds manhole covers closed when a president drives down a road. How was there a ladder sitting around, ready to climb up to the highest ground at the venue, and the Secret Service failed to take it away?

There is plenty of video of eyewitnesses yelling that there was a guy with a rifle climbing up on a ladder to the roof for at least 120 seconds before the first shot was fired. Why were the police looking for him while Secret Service wasn't? Why did the sniper have him in his sights for over a minute before he took a shot? Why did a cop climb up the ladder to look around? When Thomas Matthew Cooks pointed a gun at him, he then ducked and came down off the ladder. Did he call anyone to warn that this young man had a rifle within range of the president?

How is it the Secret Service has a female bodyguard who doesn't even reach Trump's nipples? How was she going to guard the president's body with hers? How is it another female Secret Service agent pulled her gun out a good four minutes too late, then looked around, apparently not knowing what to do? She then couldn't even get the pistol back into the holster because she's a Melissa McCarthy body double. I don't think it's a good idea to have Melissa McCarthy guarding the president.

Here’s the critical question now: Who trusts the FBI with the shooter’s computer? Will his hard drive get filed with the Nashville manifesto? How is it that the Secret Service almost didn't have snipers at all but decided to supply them only one day before the rally because all the local resources were going to be put on Jill Biden? I want Jill Biden safe, of course. I want Jill Biden to have what the first lady should have for security, but you can’t hire a few extra guys to make sure our candidates are safe?

How is it that we have a Secret Service director, Kimberly Cheatle, whose experience is literally guarding two liters of Squirt and spicy Doritos? Did you know that's her background? She's in charge of the United States Secret Service, and her last job was as the head of security for Pepsi.

This is a game, and that's what makes this sick. This is a joke. There are people in our country who thought it was OK to post themselves screaming about the shooter’s incompetence: “How do you miss that shot?” Do you realize how close we came to another JFK? If the president hadn't turned his head at the exact moment he did, it would have gone into the center of his head, and we would be a different country today.

Now, Joe Biden is also saying that we shouldn't make assumptions about the motive of the shooter. Well, I think we can assume one thing: He wanted to kill the Republican presidential candidate. Can we agree on that at least? Can we assume that much?

How can the media even think of blaming Trump for the rhetoric when the Democrats and the media constantly call him literally worse than Hitler who must be stopped at all costs?

These questions need to be answered if we want to know the truth behind what could have been one of the most consequential days in U.S. history. Yet, the FBI has its hands clasped on all the sources that could point to the truth. There must be an independent investigation to get to the bottom of these glaring “mistakes.”

POLL: Do you think Trump is going to win the election?

Kevin Dietsch / Staff, Chip Somodevilla / Staff, Kevin Dietsch / Staff | Getty Image

It feels like all of the tension that has been building over the last four years has finally burst to the surface over the past month. Many predicted 2024 was going to be one of the most important and tumultuous elections in our lifetimes, but the last two weeks will go down in the history books. And it's not over yet.

The Democratic National Convention is in August, and while Kamala seems to be the likely candidate to replace Biden, anything could happen in Chicago. And if Biden is too old to campaign, isn't he too old to be president? Glenn doesn't think he'll make it as President through January, but who knows?

There is a lot of uncertainty that surrounds the current political landscape. Trump came out of the attempted assassination, and the RNC is looking stronger than ever, but who knows what tricks the Democrats have up their sleeves? Let us know your predictions in the poll below:

Glenn's Show Prep