An email I sent on negative nominal interest rates

Some of the negative nominal premium comes from the fact that you need these govt. securities for collateral, REPOs, clearinghouse margin, etc.

That doesn’t explain *the change*, but this point is often overlooked and it makes the puzzle somewhat less mysterious.

In part, negative nominal (and real) rates reflect a scarcity of good opportunities *at the margin*, but of course inframarginal opportunities may be fine.

If you wish to try a further de-weirding of this, it may reflect a truth about agency problems rather than absolute pessimism.

If capital is relatively plentiful, and talent is super-scarce, and you don’t know how to find marginal talent, you may be stuck just storing your money.  But when talent and liquidity are combined — say Mark Zuckerberg — it will earn phenomenal returns, the other side of the coin.

In other words, this may all be a kind of correlate to income inequality and massive returns for founders…

…you have extra money, you really would like to lend it out for a real productive investment, rather than storing it at slightly negative nominal interest. [savings glut, a’la Softbank]

But whom to trust? Who is your local Mark Zuckerberg? You just don’t know. The uncle you might give it to will just rip you off and he is a dope anyway. [tech talent harder to spot because you can’t rely on traditional credentials]

If the agency wedge is larger, because the talented are already occupied for the most part, you might just have to store it.

This implies mega-returns for good talent spotters, which in fact we observe as of late.


'This implies mega-returns for good talent spotters, which in fact we observe as of late.'

Emergent Ventures still hasn't met its 4 million dollar funding goal, has it?

How many VCs are good talent spotters? To argue that anyone should be on the lookout for the next Facebook is sheer folly. The history of tech startups (across all sectors) is rife with failure and mega-returns are more like a Black Swan event than reality. One could also say that good stock pickers can markedly out perform the broader market is just as fallacious.

"sheer folly"

TC makes no bones about his love for "high status" people. The more puzzling thing is whom he considers high status. Zuckerberg, for example, seems to be the perfect example of an extremely lucky mediocrity. I can easily imagine him as a high school teacher.

High school teachers are extroverts. Zuckerberg would make a fine independent Mercedes mechanic.

Plenty of equally bright people coming up from nonacademic families end up in similar trades.

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"This implies mega-returns for good talent spotters, which in fact we observe as of late"

No, that's not what we observe at all. What we see are "mega returns" from network effect monopolies.

Right. It's kind of a libertarian just-so story that the rewarded were specially virtuous.

In practice, split the difference. It takes some amount of talent, and then good fortune in network effects.

A wise rewarded person understands that, the role of lucky breaks.

It's kind of interesting (sad) that belief in luck is one of the things that is "polarized" right now.

But it makes sense. Believe in luck, tax the winners, assist the losers. Believe "you built that" by yourself, insist you deserve it all.

Politics as a sorting on a fundamental belief, about the randomness or order of the universe.

"The new Pew poll finds that 51% of Republicans agreed that “lack of effort on his or her part” was the primary reason that a poor person would find his or herself in poverty, while only 32% put the blame on “circumstances beyond his or her control.”

There's obviously there are several causes, both independent and in combination. I've been a landlord for 20 years, and I'll say that most times there's a problem with the rent, or an eviction, the issue is self inflicted. Sometimes it is just bad luck, like a medical problem, but that's more like 10% of the time. I have one chronic late payer who drives a BMW SUV, and has alway had a nicer car than me. Mostly, it's about poor choices.

I was thinking about my high school, college, and first-job cohorts.

There were choices there, about how to open oneself to upside potential (good luck) and to protect the downside (bad luck).

It creates quite a distribution of outcomes. I probably know as many people who had skills but didn't risk success, as people who took too much risk on a weak foundation.

It might tie into my "average money" comment. The average person chooses a life path roughly matching their potential, and then gets luck of the draw. A field that explodes or dead ends, etc.

"I have one chronic late payer who drives a BMW SUV, and has alway had a nicer car than me."

He's highly profitable to bankers, either loaning him lots of money to consume fancy cars, or buying fancy cars to rent to him, at a huge premium over interest banks pay on savings.

His car is much more important than housing because the return on his money is higher. Very few people can earn money by having housing because you have not built housing near lots of jobs, so the car is much more productive in getting him to jobs, maybe even critical to his job.

As in, if he's an Uber or Lyft or independent transportation provider, the nice car is the absolute mandatory capital to earn money.

No to say luck has no role, especially in the mega rich stories. Right place, right time, and well prepared will get you wealthy.

To my mind real people aren't as polarised as the polls and politics. Real people think it's a combination of luck and talent. Then a poll asks you if it's "luck OR talent". So then you signal your group membership based on which you pick. And then the poll is used by the group you're a member of to further polarise discussion because "GOP supporters don't think it's driven by luck."

A little more nuance in polling, media, and interpretation of results by political parties might lead us to a very different place. But so might unicorns, and we don't have them either.


Luck is a factor, but you don't do people any favors telling them they have no agency or ability to influence their lives.

Pasteur's quote, "Chance favors the prepared mind", is good life advice.

'What we see are "mega returns" from network effect monopolies.'

And what do you think the Thiel Foundation forked over a million dollars to Emergent Ventures for? Well, apart from complying with charity regulations, that is.

So - 'Kelly Smith has a project to further extend and organize a parent-run charter school system in Arizona, Prenda, using Uber-like coordinating apps and “minimalist” educational methods' Almost sounds like a franchise opportunity, doesn't it?

Particularly as that blurb is from the Emergent Ventures first round. This is the blurb from the second round - 'Kelly Smith has a for-profit project to further extend a parent-run charter school system in Arizona, using Uber-like coordinating apps and “minimalist” OER methods.'

Consumers paid non-living wages don’t generate much loan demand. Communism could gain popularity as an alternative to non-living wages. Something for the top talent to noodle on.

"Communism could gain popularity.."

No it coudnt. Communism was popular when poor meant one meal a day or bread and grease. Now that poor means a smaller flat panel than your neighbor, communism is a dead letter.

The envious we will always have with us.

Also it is estimated that the Bolshevik Revolution was carried out across all of massive Russia by around only one thousand militants.

+1, the poor in modern America are pretty rich by world standards. There's a reason 1 million immigrants a year are breaking over the border to join the ranks of the American poor.

First point is not correct. You can post cash collateral to counterparties and clearing houses. And you don't 'need' government bonds for repo. Repo is a way of financing holdings of government bonds.

I don't know those details, but I'll suggest an alternative mechanism. Somewhere between smart money and dumb money you have average money. People with some stocks and some bonds, who aren't totally happy with those, who know they should do alternate investments, but have no idea how, or appetite for that risk.

I hear from those people. Average salaried workers or retirees who are sitting on cash because they don't know what to do. I'm not talking about people wholly in cash, just people with a significant cash allocation.

Multiply that by a billion people, and that's a lot of cash. Returns on cash must fall.

You have this completely backwards. The relative return on cash went up, not down.

“I don't know those details”

Yes. Clearly.

Zoom out a few stops. The savings glut that reduces return, until at a micro level, one type of short term security is slightly below zero return, one slightly above. The slight differences are not the story.

The clustering on zero rate of return for safe-ish investments is the story.

Consider cash versus a bond.

Bond rate falls to negative rates.

The relative return between cash and the bond has risen.

“Returns on cash must fall.”


Pendantic foolishness. You should be much more worried about the difference between 1 and 7 than between -1 and 0.


You have no idea how financial markets work. Like, Dude I fear for your dependents. But hey, whatever. You’re not one of us, you’re a retired HR worker. And According to my sources you’re a divorced tech HR worker living in SoCal with alienated kids who don’t talk to you, and you don’t see your kids. My sources say Inland Empire adjacent or the valley. An extremist, lives mostly online. Almost zero human contact.

Trolling aside it’s been hilarious.

Unless you’re retired or planning on retiring in 5 years, do NOT remove your investments. Please don’t. Shift to dividend stock if you’re up in arms, but don’t pull out. It’s a huge mistake.


You didn't disagree in any tangible way.

And you didn't even notice you didn't disagree in any tangible way.

When the 10 year U.S. Treasury is paying 1.5%, you shouldn't be surprised when Jyske Bank offers -0.5%.

As this article shows, there's a lot of clustering around zero.

Remove "that" from "glut that reduces"

In other words, I'm with @TheStalwart that there is no great difference between -1, 0, and +1 bonds, or more generally, interest.

I think Tyler is too, which is why he asks why people aren't out looking for actual rates of return. Presumably that is something at least +7, total portfolio return. Net investments in Facebook and Juicero.

I posit a similar but different reason.

Many people around the world have retirement accounts. Many retirement accounts give you a choose of fund types, and the one badged as a "balanced" fund tends to have some bonds and some shares (maybe 40% bonds). The trust deed typically requires the bonds to be investment grade, or treasuries in certain countries, or something similar.

These retirement accounts have regular investments. 40% of that money must go into specified bonds, irrespective of return. The people making the investment never see the performance of bonds v's shares broken out, and they've been told what they have is "balanced" so they never complain.

If there's an ongoing source of money that must buy these bonds, then we just have a simple supply and demand problem. The US is helping a bit by generating more supply (aka running a massive deficit), but it's not enough to soak up all the "balanced" retirement savings in the world.

I'll buy that. After all, the treasury yield is upstream of the general savings yield.

What Michael said, pretty much. Normally the reason one posts government bonds for margin/collateral, is to get some interest on what would otherwise be a non-interest bearing account, with little or even no haircut. That doesn't make sense for negative interest contexts. That said, institutional practices can be sticky even if they're no longer efficient, so I'll grant Tyler that such practices can contribute materially to transitory negative interest rates.

"People...who know they should do alternate investments".

Sorry, you're still talking about the dumb money there.

A lawyer friend has the time, energy, skills, contacts to go into some small real estate investment partnerships. Apartment projects. I'd consider that non-dumb but requiring "a certain set of skills" that the average person sitting on a cash allocation does not have.

"In part, negative nominal (and real) rates reflect a scarcity of good opportunities *at the margin*, but of course inframarginal opportunities may be fine."

This is too lopsided of an interpretation. The other side is that too much investor money is way too conservative at the margin. This is complacent money that is looking for risk free returns. As part of a portfolio, it is okay but when the rates are negative, it's time to put some of that into equities or equity-like securities. In the case of Denmark, they have negative rate mortgages. [1] Amazing. If you are feeling more venturous, YCombinator just had their first day of demo week, where they funded 84 startups. [2]


Negative interest rates for mortgages are definitely and oddity. I wonder if, in the US, you would have to pay taxes on the gain?

Wouldn't it be interest income? So you pay taxes to the extent you can't offset the income with interest expenses elsewhere.

Maybe the US can borrow the money from Denmark with which to buy Greenland.

Are real returns on capital zero or negative? That's the implication of negative interest rates. I've read many papers that show data reflecting a rate of return on all capital of between 8% and 9%, with much higher rates of return on business capital. The same authors complain that the secular stagnation argument is based on interest rates on Treasuries. Are investors looking at the wrong data or are markets lying?

I read Cowen's post to mean that at the margin the rate of return on capital is quite low, and that the aggregate data provide a misleading picture: it's at the margin that investors base their decision to invest, not some historical average. Thus, investors are looking for the next Facebook and talent like Mark Zuckerberg, real innovations and innovators. [One might respond that Facebook (and Google) are in the advertising business, the innovation being digital advertising that can better focus the ads to the individual consumer's interests, and, Facebook (and Google) being first in the segment, reached a scale that those coming later can never reach. Of course, advertising is profitable only if consumers purchase the products advertised; absent consumption, what's the point of advertising, whatever the media.]

I suspect that the rate of return at the margin is only part of the story, that the rate of return on capital has been inflated, inflated by rising asset prices, that gives a misleading picture of the rate of return on productive capital; indeed, even accessing the rate of return on "productive capital" (i.e., the means of production and labor power) is a herculean task. All the hand-wringing (the Trump administration supposedly is preparing a proposal for a cut in the payroll tax!), I suggest, implies lack of confidence in asset prices, and either stagnant asset prices or, more likely, a fall in asset prices, the pessimistic view for asset prices a function of pessimism for the consumer consumption that has pushed asset prices up. Economists, who like to make predictions of the future based on their reading of data from the past, are doing it all wrong. [Market monetarists, for sure, but they are not alone.] Further, it's revealing that Cowen's focus is on tech, the sector that has become the black hole for capital, the rates of return so misleading (Uber anyone?) as to be deceptive. Where is the next big thing in tech? Autonomous cars? Artificial intelligence? Reliance on rising asset prices for prosperity is misplaced reliance, for the con(fidence) that is required cannot be sustained in perpetuity.

Rayward, have a look at this link posted above you, it might reveal something new:

The companies do everything from satellite launch to fraud detection to commercial real state to student loans to insurance pricing. Not saying every idea there will work but this is how businesses are formed and begin their Darwinian struggle to reach IPO. Entrepreneurs are doing there job but capital that doesn't take a risk gets negative returns.

"I've read many papers that show data reflecting a rate of return on all capital of between 8% and 9%, with much higher rates of return on business capital."

That means capital is very scarce.

Which happens because capitalists have succeeded in getting government to give them monopoly power to extract high rents on their scarce capital.

The primary mechanism is by cutting funding for complementary capital buoy tax cuts, stopping the paying of workers to build transportation capital.

For example, a century ago the big cities of today were smaller and hindered by lack of transport, so they built subways by paying tens of thousands of workers for innovative electric trains, and then extending into the rural land above ground.

Subways and light rail were built into the 60s, but then interests of capitalist for high profits led to cutting off funding for such projects.

Building transportation caused profits on capital to crash. Take Detroit. Extremely fine housing with great public services with increasing diversity in people able to afford the housing. This created support for building roads out of Detriot and building water and sewer, utilities, all with Federal money, so new housing could be built, capital, that compared with Detroit's housing capital. This created a surplus of capital, and capital prices fell, generating negative rates of returns.

If transportation capital, high speed subways were built to the plentiful California vacant land, SF and LA real estate capital would quickly start producing high negative rates of return.

Capitalists owning real estate in SF and LA certainly act to block anything government does to increase the number of competing capitalists, eg, home owners in the SF/LA market owning homes outside SF/LA.

Their worst nightmare is Elon Musk boring tunnels with private money, private money that already owns or will buy, hundreds of square miles of vacant land, allowing lots of new housing construction, and new massive factories.

Opposition to Elon boring tunnels with private money is quite high, and certainly much comes from those making high profits off extremely scarce capital.

Perhaps the entire marginal revolution is just an overfished pond for secondary markets and redistribution, in a time when service sector activity is 80 percent of GDP revenue.

I keep wondering how much age demographics factor for a lot of discussed phenomena, from growing inequality to these negative interest rates. Worldwide, the boomers as a generation are nearing their peak wealth, while their retirement accounts, pensions, life insurance, etc. are reaching peak demand for low-risk assets. And at the same time governments are given the opportunity to borrow at such rates they are facing 20 years of health and retirement obligations for most of this aging demographic and may balk at going much farther into debt to fund infrastructure, R&D, etc.

Even the growth of higher ed tuition rates seems like a largely demographic phenomenon. Actual costs to students have grown only slightly at private institutions over the last 20 years. Actual public institution costs have doubled over that time due to states reducing public funding but are still very affordable. Yet the published tuition rates have skyrocketed. Could this not be a result of peak boomer donations to higher ed? If you’re a university with a lot of boomer money coming in earmarked for financial aid, you have to raise the sticker price to unlock those funds, which cover nearly the entire published increase.

With Germany's negative returns it is cheaper to borrow and invest in infrastructure that pays off now and in the future than it is to build and finance in the future.

Same may be true in the US.

China and Mexico will build that wall, or at least pay for it.

Or, the wealthy got so much in tax cuts they don't know where to put it. If you redistributed the tax cuts to those with a higher marginal rate of consumption you might not have this problem.

Tax profits at high rates and expand the paying worker tax dodge to building all capital so businesses slash taxable profits by building more factories, capital, and training more workers, human capital, annd gaining control of it by paying for golden handcuffs.

Paying more to workers increases the number of consumers with more money to buy goods and services.

So, let's get this straight: The tax cut for corporations and the wealthy did not sustain itself as promised. But, there is a flight to safety, so the wealthy buy bonds.

The winner seems to be the wealthy. Get the tax cut. Increase the deficit if the tax cut doesn't stimulate. If there are no better uses for your tax cut, buy bonds with your tax cut money.

Those in the future seem to be left out because they have to pay for this cycle.

Do you really need attention that badly that you had to rattle off this laundry list of edgy points?

Yes, but its not the attention that bothers you, but the points.

Zuckerburg and the wealthy need more money even after the tax cuts. But they don't know what to do with it, except buy government bonds.

That's really edgy if you think about it: create the deficit with tax cuts and sell the beneficiaries of the tax cuts the bonds necessary to cover the deficit so they can later demand a cut in Social Security, Medicare, other government programs (but NOT the military) to pay for the bonds.

Your first two comments were actually pretty good, so for me, its more the quality drop off that bothers.

You can't please everybody.

And, it might just be a case of target marketing:

I once saw this TV commercial which I did not understand, and mentioned it to a niece who, at the time, was in advertising.

I described the TV ad to her, and she laughed at it an said: "Bill, that was a great TV commercial. It's just that you were not the target audience."

No, the message does not bother me, and I even agree with some of it, but why did you have to throw in Epstein and Greenland in there?

A couple of points:
- You say "Zuckerburg and the wealthy..." You realize that by world standards most likely YOU are part of the wealthy?
- You say "...(but NOT the military)" You realize, I hope, that one of most important functions of the US military is to act as a welfare program, right?
- You say "cut in... [programs]... to pay for the bonds". This is a joke, right? What administration are you envisioning that would cut, or even slow the growth of any of those, whether Republican or Democrat? As Japan has demonstrated, you pay the bonds by issuing more bonds. And for a long time nothing happens, and everybody is happy. And then Greece happens, and everybody is shocked, and "nobody could have foreseen that".

Epstein and Greenland are there because they are both islands. One is the dream of a dead rich man; the other of a living President.

I can accept literary criticism. It comes with the territory.

Enjoy the day.

Bill's a partisan. He's not interested in an unbiased presentation of the truth, but in slamming the other side. To be fair, he does make good points, but yes then he muddies up the context with point scoring.

Dear Rat, or is it Putin (for short),

I think you don't like the presentation of the truth, but may enjoy the pointedness of the presentation, which makes you anxious, nervous and unsettled.

I know it is difficult to write on such a non-partisan website, but give me some slack because it difficult to match and learn from the non-partisan, intellectually satisfying comments of some posters whose name mimics a supporter of our President.

Dear Bill,

I'd be glad to cut you some slack if you feel you need it.


If capital is relatively plentiful, and talent is super-scarce, and you don’t know how to find marginal talent, you may be stuck just storing your money.

Isn't that what the banking business was originally all about? A place that charged depositors to safely store their gold? Before embracing the idea that they could loan that gold to a third party.

Banks didn't loan money out when they first started up? (whenever that was). Did they just make their money on fees? Honestly don't know the history of this business.

The exclusive focus on VCs and tech seems misguided to me. Especially since the golden era appears well over. I really don't believe we're ever going to see a new tech company that grows to the size of Google, Amazon, or Facebook. A 'big' IPO is now something like Slack or Pinterest, and I wouldn't be surprised if future years had trouble matching those 2019 issues. It seems a bit like Targaryen dragons starting as city-destroying monsters and ending up the size of house cats. But we had a couple hundred years of post-industrial revolution economic growth before there was such a thing as a tech IPO, and I expect we'll have it even as they decline in size and importance.

"Some of the negative nominal premium comes from the fact that you need these govt. securities for collateral, REPOs, clearinghouse margin, etc."

This seems a bit obscure. Who is the "you" in that statement? I suspect it is something of a reference to market participants, which then largely means "market result". But that is just circular.

If the "you" is just the buyer of the securities, then that seems to suggest a rather questionable collateralization structure. Does it point to some type of monopoly type setting?

Moreover, if the securities are required why did they ever really pay interest? Seems to suggest a need to analyze various segments of buyers and implies that one subset of buyers -- those without any alternative collateral option -- are not dominating the market outcome.

If so, does that imply a setting much like one sees with the desperate who end up in highly leveraged and high interest settings -- and so highly at risk of failing. In other words, is this pointing to increased risks of yet another Lehman type event?

Wait, the only investment choices are German bonds or tech startups?

Why is it always a "lack of investment opportunities" and never an "excess of wealth?" It strikes me that one purpose of recessions is to destroy inefficiently-deployed capital (the most efficient industries i know are deeply cyclical...the downturns force productivity). By constantly cutting recessions short isn't it possible we've simply pushed the ratio of wealth/investment opportunities too high via the numerator?

A second observation: how is it that the same people who lament a "lack of investment opportunities" are also comfortable with an expected high-single-digit return on equities?

So if I'm following this correctly it's a particular type of shortage of human capital...either genius or something creates an odd sort of investment climate. On the margin there's only small returns to be had, hence interest rates are negative for many. But why sit on a pile of cash instead of spending it? Because should you get the right person to come along, you can make super returns by putting him/her together with your capital.

This seems like a variation on Keynes's speculative motive for liquidity. Hold onto cash, even though rates are super low, because you want to be ready when you uncover an investment possibility.

What seems a bit odd, though, is we have massive investment in AI & there's a lot of investment done in usability and design. You figure this would serve as competition to the so-called 'super talents' or augment their supply. Why are there, then, people sitting on vast hordes of cash waiting to find an enlightened super-talent to come to them with the next Facebook or Amazon?

"If capital is relatively plentiful, and talent is super-scarce, and you don’t know how to find marginal talent, you may be stuck just storing your money"

But capital is not plentiful, but very scarce.

Amazon is building as many ware houses, capital, as it can.

Amazon is limited in the site's it can build its warehouses by scarcity of transportation assets, capital, building warehouse at junctions of transport committted to be, or actuallly, built before the 70s. This was done to cut taxes.

Amazon as a retailer is limited in its suppliers to Asian factories because of a scarcity of US factories (capital).

Of course, many businesses are faced with a scarcity of human capital because government has cut its production of human capital by cutting funding of trade schools, or most critically failing to invest in trade schools, at best buying 1920s machinery to train future workers because of a lack of investment in $250,000 tools, capital, for each student to train on to be skilled at using employer machinery. This was done to cut taxes.

Tesla is building huge factories, capital, because huge factories to build lithium ion cells and then assembly them into batteries are extremely scarce.

SpaceX is creating rocket designs, capital, and factories and space ports, capital, because transport to Mars and all points between is extremely scarce.

The problem for those with money is they see a huge scarcity of customers with money to pay for goods and services. They see the number of customers able to buy electric vehicles with gross margins of 40% to be far smaller than those able to afford an imported car, so they are destroying capital, factories in Lordstown, and looking for a government to supply complements like transportation capital, human capital. Asian, especially China, is spending trillions building complementary capital, skilled workers, transportation, needed by factories, capital.

Money is not capital unless it's working, as in held in trust to pay for delivery of goods and services. If money is not on it's way to workers, it's not capital.

I wonder what Tyler means by "agency problem" in this context. He seems to be referring to scarcity of talent and not the inherent contradiction between the interests of the employer and the employee. I think that scarcity of employable talent makes sense, specially in declining populations, where few follow real science careers. And Jews like Zuckerman are not reproducing themselves.

1. Who is Zuckerman?
2. If you meant Mark Zuckerberg, he has 2 kids so far
3. Fuck you, anti-semite

LOL, Zuckerberg he is. I meant in the context of the article, that is, generic Jewish talented boy. BTW, this specific person has NOT reproduced, he has not produced another talented Jewish boy. I assume you are so deep in the American hyper-liberal egalitarian "culture" that you cannot see it. BTW I am an Israeli Jew, and I mean a practicing one, you may have never met one. Be well.

"you may be stuck just storing your money"

-the puzzle is that there are ways to store money without receiving a guaranteed negative return, not that people want to store money

"But whom to trust?"

there are many people you can trust to provide at least a zero, rather than negative, return on savings. you could also trust a hole in the ground, if you don't like people.

"-the puzzle is that there are ways to store money without receiving a guaranteed negative return, not that people want to store money"

Well not a lot. Stocks and bonds have a positive return in the long run but in the short run they can turn very negative. Savings accounts at banks are typically positive, slightly, but FDIC only covers you for a few hundred thousand. Say you have hundreds of millions to park and you are required to absolutely *not* lose any large amount of capital AND you must be ready to turn that into hard cash almost immediately when given notice. Your options get a bit smaller now.

If there is a drop in demand, and falling or negative interest rates, why aren't we discussing liquidity traps ala Japan in the 90's.

What if the interest rate cuts or tax cuts do not spur demand.

What if the last tax cuts make it difficult to enact stimulus programs, or what if the rates are 0 or negative and nothing happens.

You should ask the smartest man in government, who got his degree at Wharton and stable genius, for the answer to these question.

"Some of the negative nominal premium comes from the fact that you need these govt. securities for collateral, REPOs, clearinghouse margin, etc."

Why would government debt be preferable to cash for these purposes? Eg you don't need to go to the REPO market if you just have cash. Right?

In the late 1940s there were a couple of instances of negative T-Bill yields. This was explained to me as a result of the practice then (I don't know if it is today) that successful bidders in a Treasury auction got preferential treatment in the next auction.

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