I have a random question about this. My understanding is that the US Treasury won't sell Treasury bonds with a negative yield (i.e. selling a bond for $500 that pays $499 at the end of a year). (Yields on outstanding T-bills can go negative, but that's based on prices in the secondary market, I think.) At the same time, if the bonds are oversubscribed at 0% interest, there would presumably be demand for bonds that had a very small negative yield, which would obviously be advantageous for the government. Do you know, is there a good reason that the government maintains a 0% floor in its sales?
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Date: 2011-12-26 11:46 pm (UTC)