Why buy 0% or negative interest Treasury bills? Why not hold cash? Here are the possible reasons I have come up with to buy them, but many are probably wrong.
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Fear of banking collapse - these people cannot simply keep cash, because their savings are too large to do so. They figure the government is more reliable than the banks. Anything over the FDIC limit needs to be put elsewhere.
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Speculation - I don’t know a whole lot about how Treasuries are traded and auctioned, but I could assume that one might buy a Treasury on the speculation that future Treasuries will have lower yeilds, creating a greater market demand for the higher yeild previously issued Treasuries. Does that make sense, or will such demand simply be factored into future Treasury auctions?
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Faith in government intervention - Maybe people desire to lend to the government, even if directly unprofitable, because they believe that the government’s bailouts, etc, will heal the economy, which is more valuable than an additional future purchasing power. In other words, it is a psychic profit.
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Indirect Quantitative Easing - Rather than the FED directly purchasing treasuries, it could make known that it desires to monetize certain kinds of Treasuries. Can buyers profit by turning around and selling to the FED, or would the government simply sell directly to the FED? Could big bank believe that inflation can save them and thus aid the FED’s attempts to monetize Treasuries?