Treasury Price Quotes

For every promise, there is a price to pay... If the promise is clear, the price is easy...

Cheap grace means grace sold on the market like cheapjacks' wares. The sacraments, the forgiveness of sin, and the consolations of religion are thrown away at cut prices. Grace is represented as the Church's inexhaustible treasury, from which she showers blessings with generous hands, without asking questions or fixing limits. Grace without price; grace without cost! The essence of grace, we suppose, is that the account has been paid in advance; and, because it has been paid, everything can be had for nothing. Since the cost was infinite, the possibilities of using and spending it are infinite. What would grace be if it were not cheap?... Cheap grace is the preaching of forgiveness without requiring repentance, baptism without church discipline, Communion without confession, absolution without personal confession. Cheap grace is grace without discipleship, grace without the cross, grace without Jesus Christ, living and incarnate. Costly grace is the treasure hidden in the field; for the sake of it a man will go and sell all that he has. It is the pearl of great price to buy which the merchant will sell all his goods. It is the kingly rule of Christ, for whose sake a man will pluck out the eye which causes him to stumble; it is the call of Jesus Christ at which the disciple leaves his nets and follows him. Costly grace is the gospel which must be sought again and again, the gift which must be asked for, the door at which a man must knock. Such grace is costly because it calls us to follow, and it is grace because it calls us to follow Jesus Christ. It is costly because it costs a man his life, and it is grace because it gives a man the only true life. It is costly because it condemns sin, and grace because it justifies the sinner. Above all, it is costly because it cost God the life of his Son: "ye were bought at a price," and what has cost God much cannot be cheap for us. Above all, it is grace because God did not reckon his Son too dear a price to pay for our life, but delivered him up for us. Costly grace is the Incarnation of God.

The follower of fashion can be as honest as the leader of the rebellion against it.

And a variety of more colorful names. Hypothetically.” The privateer cast him an assessing glance. “Just how did you know I wasn’t who I claimed to be, Mister Brekker?” Kaz shrugged. “You speak Kerch like a native—a rich native. You don’t talk like someone who came up with sailors and street thugs.” The privateer turned slightly, giving Kaz his full attention. His ease was gone, and now he looked like a man who might command armies. “Mister Brekker,” he said. “Kaz, if I may? I am in a vulnerable position. I am a king ruling a country with an empty treasury, facing enemies on all sides. There are also forces within my country that might seize any absence as an opportunity to make their own bid for power.” “So you’re saying you’d make an excellent hostage.” “I suspect that the ransom for me would be considerably less than the price Kuwei has on his head. Really, it’s a bit of a blow to my self-esteem.” “You don’t seem to be suffering,” said Kaz. “Sturmhond was a creation of my youth, and his reputation still serves me well. I cannot bid on Kuwei Yul-Bo as the king of Ravka. I hope your plan will play out the way you think it will. But if it doesn’t, the loss of such a prize would be seen as a humiliating blunder diplomatically and strategically. I enter that auction as Sturmhond or as no one at all. If that is a problem—” Kaz settled his hands on his cane. “As long as you don’t try to con me, you can enter as the Fairy Queen of Istamere.

The United States thus achieved what no earlier imperial system had put in place: a flexible form of global exploitation that controlled debtor countries by imposing the Washington Consensus via the IMF and World Bank, while the Treasury bill standard obliged the payments-surplus nations of Europe and East Asia to extend forced loans to the U.S. Government. Against dollar-deficit regions the United States continued to apply the classical economic leverage that Europe and Japan were not able to use against it. Debtor economies were forced to impose economic austerity to block their own industrialization and agricultural modernization. Their designated role was to export raw materials and provide low-priced labor whose wages were denominated in depreciating currencies. Against dollar-surplus nations the United States was learning to apply a new, unprecedented form of coercion. It dared the rest of the world to call its bluff and plunge the international economy into monetary crisis. That is what would have happened if creditor nations had not channeled their surplus savings to the United States by buying its Government securities.

Carinas was sent hither by Cæsar, who plundered cities and temples to fill the empty treasury. At the price of the sweat and tears of people, he is building the ‘golden house’ in Rome. It is possible that the world has not seen such a house, but it has not seen such injustice. Thou

The military-industrial complex corporations never complain of higher prices for bombs, planes, drones, and missiles. They benefit when prices rise and when cost overruns are covered with more money from the US Treasury. Those who profit are the greatest champions of the military readiness and armed conflict. They are represented by lobbyists who greatly influence both political parties. Corporate war profits and high union wages bring about remarkable cooperation between the two parties despite the political rhetoric suggesting passionate disagreement. And these militaristic policies are defended with patriotic zeal, and in appeals regarding our moral obligation to take care of all the world’s needs and to meet our obligation to spread our “goodness” around the world.

What’s an IPO, exactly? A company decides it wants to “float” part of its equity on the public markets, allowing employees and founders to sell private shares to pay them off for years of service, as well as sell shares out of the corporate treasury to have some money in the bank. Large investment banks (such as my former employer Goldman Sachs) form what’s called a “syndicate” (“mafia” might be a better term) wherein they offer to effectively buy those shares from Facebook, and then sell them into the capital markets, usually by pushing it via their sales force onto wealthy clients or institutional investors. That syndicate either guarantees a price (“firm commitment”) or promises to get the best price it can (“best effort”). In the former case, the bank is taking real execution risk, and stands to lose money if it doesn’t engineer a “pop” in the stock on opening day. To mitigate the risk, the bank convinces the offering company to expect a lower price, while simultaneously jacking up what real price the market will bear with a zealous sales pitch to the market’s deepest pockets. Thus, it is absolutely jejune to think that a stock’s rise on opening day is due to clamoring and unexpected interest. Similar to Captain Renault in Casablanca, Wall Street bankers are shocked—shocked!—that there should be such a large and positive price dislocation in the market they just rigged.

With regard to the price then of the men themselves, it is obvious that the public treasury is in a better position to provide funds than any private individuals. What can be easier than for the Council to invite by public proclamation all whom it may concern to bring their slaves, and to buy up those produced? Assuming the purchase to be effected, is it credible that people will hesitate to hire from the state rather than from the private owner, and actually on the same terms? People have at all events no hesitation at present in hiring consecrated grounds, sacred victims, houses, etc., or in purchasing the right of farming taxes from the state. To ensure the preservation of the purchased property, the treasury can take the same securities precisely from the lessee as it does from those who purchase the right of farming its taxes. Indeed, fraudulent dealing is easier on the part of the man who has purchased such a right than of the man who hires slaves. Since it is not easy to see how the exportation of public money is to be detected, when it differs in no way from private money. Whereas it will take a clever thief to make off with these slaves, marked as they will be with the public stamp, and in face of a heavy penalty attached at once to the sale and exportation of them. Up to this point then it would appear feasible enough for the state to acquire property in men and to keep a safe watch over them.

Hamilton argued that the security of liberty and property were inseparable and that governments should honor their debts because contracts formed the basis of public and private morality: “States, like individuals, who observe their engagements are respected and trusted, while the reverse is the fate of those who pursue an opposite conduct.”The proper handling of government debt would permit America to borrow at affordable interest rates and would also act as a tonic to the economy. Used as loan collateral, government bonds could function as money—and it was the scarcity of money, Hamilton observed, that had crippled the economy and resulted in severe deflation in the value of land. America was a young country rich in opportunity. It lacked only liquid capital, and government debt could supply that gaping deficiency. The secret of managing government debt was to fund it properly by setting aside revenues at regular intervals to service interest and pay off principal. Hamilton refuted charges that his funding scheme would feed speculation. Quite the contrary: if investors knew for sure that government bonds would be paid off, the prices would not fluctuate wildly, depriving speculators of opportunities to exploit. What mattered was that people trusted the government to make good on repayment: “In nothing are appearances of greater moment than in whatever regards credit. Opinion is the soul of it and this is affected by appearances as well as realities.” Hamilton intuited that public relations and confidence building were to be the special burdens of every future treasury secretary.

At the Treaty of San Ildefonso, Napoleon had promised Spain not to sell Louisiana to a third party, a commitment he now decided to ignore. On the same day that Whitworth called for his passports in Paris, across the Atlantic President Thomas Jefferson signed the Louisiana Purchase, doubling the size of the United States at the stroke of his pen. The Americans paid France 80 million francs for 875,000 square miles of territory that today comprises all or some of thirteen states from the Gulf of Mexico across the Midwest right up to the Canadian border, at a cost of less than four cents an acre.93 ‘Irresolution and deliberation are no longer in season,’ Napoleon wrote to Talleyrand. ‘I renounce Louisiana. It is not only New Orleans that I cede; it is the whole colony, without reserve; I know the price of what I abandon … I renounce it with the greatest regret: to attempt obstinately to retain it would be folly.’94 After the Saint-Domingue debacle and the collapse of Amiens, Napoleon concluded he must realize his largest and (for the immediate future) entirely useless asset, one that might eventually have drawn France into conflict with the United States. Instead, by helping the United States to continental greatness, and enriching the French treasury in the process, Napoleon was able to prophesy: ‘I have just given to England a maritime rival that sooner or later will humble her pride.’95 Within a decade, the United States was at war with Britain rather than with France, and the War of 1812 was to draw off British forces that were still fighting in February 1815, and which might otherwise have been present at Waterloo.

Professor Joseph Stiglitz, former Chief Economist of the World Bank, and former Chairman of President Clinton's Council of Economic Advisers, goes public over the World Bank’s, “Four Step Strategy,” which is designed to enslave nations to the bankers. I summarise this below, 1. Privatisation. This is actually where national leaders are offered 10% commissions to their secret Swiss bank accounts in exchange for them trimming a few billion dollars off the sale price of national assets. Bribery and corruption, pure and simple. 2. Capital Market Liberalization. This is the repealing any laws that taxes money going over its borders. Stiglitz calls this the, “hot money,” cycle. Initially cash comes in from abroad to speculate in real estate and currency, then when the economy in that country starts to look promising, this outside wealth is pulled straight out again, causing the economy to collapse. The nation then requires International Monetary Fund (IMF) help and the IMF provides it under the pretext that they raise interest rates anywhere from 30% to 80%. This happened in Indonesia and Brazil, also in other Asian and Latin American nations. These higher interest rates consequently impoverish a country, demolishing property values, savaging industrial production and draining national treasuries. 3. Market Based Pricing. This is where the prices of food, water and domestic gas are raised which predictably leads to social unrest in the respective nation, now more commonly referred to as, “IMF Riots.” These riots cause the flight of capital and government bankruptcies. This benefits the foreign corporations as the nations remaining assets can be purchased at rock bottom prices. 4. Free Trade. This is where international corporations burst into Asia, Latin America and Africa, whilst at the same time Europe and America barricade their own markets against third world agriculture. They also impose extortionate tariffs which these countries have to pay for branded pharmaceuticals, causing soaring rates in death and disease.

During his time working for the head of strategy at the bank in the early 1990s, Musk had been asked to take a look at the company’s third-world debt portfolio. This pool of money went by the depressing name of “less-developed country debt,” and Bank of Nova Scotia had billions of dollars of it. Countries throughout South America and elsewhere had defaulted in the years prior, forcing the bank to write down some of its debt value. Musk’s boss wanted him to dig into the bank’s holdings as a learning experiment and try to determine how much the debt was actually worth. While pursuing this project, Musk stumbled upon what seemed like an obvious business opportunity. The United States had tried to help reduce the debt burden of a number of developing countries through so-called Brady bonds, in which the U.S. government basically backstopped the debt of countries like Brazil and Argentina. Musk noticed an arbitrage play. “I calculated the backstop value, and it was something like fifty cents on the dollar, while the actual debt was trading at twenty-five cents,” Musk said. “This was like the biggest opportunity ever, and nobody seemed to realize it.” Musk tried to remain cool and calm as he rang Goldman Sachs, one of the main traders in this market, and probed around about what he had seen. He inquired as to how much Brazilian debt might be available at the 25-cents price. “The guy said, ‘How much do you want?’ and I came up with some ridiculous number like ten billion dollars,” Musk said. When the trader confirmed that was doable, Musk hung up the phone. “I was thinking that they had to be fucking crazy because you could double your money. Everything was backed by Uncle Sam. It was a no-brainer.” Musk had spent the summer earning about fourteen dollars an hour and getting chewed out for using the executive coffee machine, among other status infractions, and figured his moment to shine and make a big bonus had arrived. He sprinted up to his boss’s office and pitched the opportunity of a lifetime. “You can make billions of dollars for free,” he said. His boss told Musk to write up a report, which soon got passed up to the bank’s CEO, who promptly rejected the proposal, saying the bank had been burned on Brazilian and Argentinian debt before and didn’t want to mess with it again. “I tried to tell them that’s not the point,” Musk said. “The point is that it’s fucking backed by Uncle Sam. It doesn’t matter what the South Americans do. You cannot lose unless you think the U.S. Treasury is going to default. But they still didn’t do it, and I was stunned. Later in life, as I competed against the banks, I would think back to this moment, and it gave me confidence. All the bankers did was copy what everyone else did. If everyone else ran off a bloody cliff, they’d run right off a cliff with them. If there was a giant pile of gold sitting in the middle of the room and nobody was picking it up, they wouldn’t pick it up, either.” In

The wads of worthless paper money were growing heavier in the pockets of the nation, but there was less and less for that money to buy. In September, a bushel of wheat had cost eleven dollars; it had cost thirty dollars in November; it had cost one hundred in December; it was now approaching the price of two hundred—while the printing presses of the government treasury were running a race with starvation, and losing.

This is a venerable historical office. You don’t realize this, but it is. Usually inherited, a patrimony. El judío de corte, der Hofjude, the Court Jew. The protected Jew. The useful Jew to keep in your pocket, as a consultant on your taxes. Sometimes an intermediary, sometimes an intercessor. Always balancing competing interests. The Elder of the Judenrat who when the Gestapo says, we need to kill one thousand Jews, he’s the one who picks which one thousand. The shtadlan who when the emperor summons him and says, we need more money for our treasury, he tries to bargain down the price while averting a massacre. A tenuous duty, susceptible to all corruptions. Powerful, but never the most powerful, and only partially trusted by both sides, belonging entirely to neither.

9. Now the ay to reach Christ is not hard to find: it is the Church. Rightly does Chrysostom inculcate: "The Church is thy hope, the Church is thy salvation, the Church is thy refuge" (Hom. de capto Eutropio, n. 6). It was for this that Christ founded it, gaining it at the price of His blood, and made it the depository of His doctrine and His laws, bestowing upon it at the same time an inexhaustible treasury of graces for the sanctification and salvation of men. You see, then, Venerable Brethren, the duty that has been imposed alike upon Us and upon you of bringing back to the discipline of the Church human society, now estranged from the wisdom of Christ; the Church will then subject it to Christ, and Christ to God. If We, through the goodness of God Himself, bring this task to a happy issue, We shall be rejoiced to see evil giving place to good, and hear for our gladness, "a load voice from heaven saying: Now is come salvation, and strength, and the kingdom of our God and the power of his Christ" (Apoc. 12:10).

There’s a price to be paid for liquidity and it’s reflected in the security’s yield. The yield of the current issue is always a little bit lower than other Treasury issues with similar maturities. That’s what’s called the liquidity premium. When investors buy the current issue, they are giving up a little yield in order own the current, which they can buy and sell with smaller bid/offer spreads, and there’s plenty of liquidity to move large sizes. However, this liquidity premium fades over time.

Overall, it was a pretty good trading strategy. He made money in two out of three possible scenarios. If bond prices went down, he made a lot of money. If the market stayed the same, he earned free interest on the cash. If the Treasury market rallied, he risked a pretty big loss. And guess what? Between February 1982 and May 1982, the Treasury market reversed its decline and started to rally. This was the one chance in three that he wasn’t hoping for. When the May 15, 1982, coupon interest payments were due on a Monday, Drysdale was wiped out and didn’t have enough money to make the payments. That Sunday evening, Heuwetter called Drysdale's clearing bank, Chase Manhattan, and informed them that "we may have a problem" meeting the $160 million interest payment due the next day. Could Chase possibly lend Drysdale $200 million to tide them over? What he didn’t tell them was that, yes, the market rally had wiped them out, but the problem was even worse than that. Drysdale had conducted its Repo trading mostly through Chase's Securities Lending Department.

It’s importance, however, is bigger than that. Treasury securities are the risk-free yield curve for all of the financial markets. That’s right, the yields of Treasury Bills, Notes, and Bonds from overnight to 30 years make up a yield curve that is used to price all other fixed-income securities. The Treasury market is the reference rate for interest rates. Treasurys are a tool for pricing corporate bonds, municipal bonds, emerging market bonds, federal agencies, mortgage-backed securities, and other dollar assets. On top of that, they’re also a tool for speculation and hedging risk.

Treasury Bills are the shortest securities, and they’re discount securities[8]. The Treasury regularly issues 1 Month, 2 Month, 3 Month, 6 Month, and Year Bills. Treasury Notes are securities that were originally issued with maturities between 2 years and 10 years. Currently, the Treasury issues 2 Year Notes, 3 Year Notes, 5 Year Notes, 7 Year Notes, and 10 Year Notes. In the past, there was a 4 Year Note, but it was discontinued. Treasury Bonds[9] are securities originally issued with maturities of either 20 or 30 years. Treasury securities are issued on a very regular schedule. Auction schedules are announced by the Treasury and don’t change very often. Keeping Treasury securities regular and predictable helps keeps the market liquid, and therefore reduces funding costs, in theory, for the government. On top of that, large liquid Treasury issues are good for the financial markets. Just remember, large and liquid is certainly better than small and illiquid! Small issues can experience price distortions, so the Treasury will make adjustments in their debt sales to keep the market liquid, running smoothly and predictably.

David Heuwetter was the head trader at Drysdale Government Securities and had a great trading idea. It was really more of a scheme to take advantage of the difference in the market convention between outright Treasury purchases and Repo trades. Still at this time, when someone bought and sold a U.S. Treasury outright, the securities settled with the coupon accrued interest added to the purchase price. That is, when you bought a U.S. Treasury, you had to pay for the amount of interest which had already accrued on the security since the last coupon payment date. When interest rates were low, the accrued interest was small, even negligible. However, in the early 1980s, interest rates shot up above 10%, which meant there was a lot of interest accruing on bonds each day.  Heuwetter realized he could short-sell U.S. Treasurys outright and deliver the securities to the buyer and receive the price plus the accrued interest. Then, when he borrowed the securities in the Repo market, he only had to pay the purchase price. He was getting the full use of the accrued interest on the bonds at no cost.

As monthly mortgage payments rose for home buyers over the past several years as a result of higher mortgage rates (coupled to increasing home prices), what simultaneously so too did rise were earned income opportunities for bondholders. Bondholders benefitted…at the expense of home buyers. If the Fed does indeed enact two rate cuts through the end of 2024, mortgage rates are likely to drop. As too will yields bondholders attain, through their purchase of newly-issued 10-year Treasuries. A trade-off is in the making. A much-welcomed rebalancing.

The cross of Christ is to be the great center round which everything must revolve. Everything else must be in subordination to it. The cross is planted midway between divinity and humanity, between heaven and earth. It never moves nearer the earth. All things concerning the salvation of man must lie in the shadow of the cross. Heavenly intelligencies, uniting with the earthly, bow to this central attraction, and voices from heaven and earth unfold to the universe the plan of redemption. The cross is not to lose its significance to either world. All property, all wealth, that finds its way into the Lord’s treasury, finds its true place in the arrangement of God. … Brethren and sisters, will you work for selfish purposes? Will you let the world with its selfish aims and principles come between you and your God? Will you serve mammon? Christ plainly declares that you cannot serve God and mammon. Will you subscribe your name on the pages of the world’s record, or will you relate yourself to God, and let him write your name in the record books of heaven, to be immortalized in the universe of God? Christ has the first claim on you. “Ye are not your own; for ye are bought with a price. …” I entreat you, spring into action at once, and be all that the name Christian signifies. You will then have no desire to live for self. You will have the high distinction of living wholly for Christ. -ST 8-17-91

Churchill made a point about the power of government: A National or Municipal Beef Trust, with the United States Treasury at its back, might indeed give more regular employment at higher wages to its servants, and might sell cleaner food to its customers—at a price. But if evil systems corrupt good men, it is no less true that base men will dishonor any system, and while no bond of duty more exacting than that of material recompense regulates the relations of man and man, while no motion more lofty than that of self-interest animates the exertions of every class, and no hope beyond the limits of this fleeting world lights the struggles of humanity, the most admirable systems will merely succeed in transferring, under different forms and pretexts, the burden of toil, misery, and injustice from one set of human shoulders to another.

Labor and employment firm Fisher & Phillips LLP opened a Seattle office by poaching partner Davis Bae from labor and employment competitor Jackson Lewis PC. Mr. Bea, an immigration specialist, will lead the office, which also includes new partners Nick Beermann and Catharine Morisset and one other lawyer. Fisher & Phillips has 31 offices around the country. Sara Randazzo LAW Cadwalader Hires New Partner as It Looks to Represent Activist Investors By Liz Hoffman and David Benoit | 698 words One of America’s oldest corporate law firms is diving into the business of representing activist investors, betting that these agitators are going mainstream—and offer a lucrative business opportunity for advisers. Cadwalader, Wickersham & Taft LLP has hired a new partner, Richard Brand, whose biggest clients include William Ackman’s Pershing Square Capital Management LP, among other activist investors. Mr. Brand, 35 years old, advised Pershing Square on its campaign at Allergan Inc. last year and a board coup at Canadian Pacific Railway Ltd. in 2012. He has also defended companies against activists and has worked on mergers-and-acquisitions deals. His hiring, from Kirkland & Ellis LLP, is a notable step by a major law firm to commit to representing activists, and to do so while still aiming to retain corporate clients. Founded in 1792, Cadwalader for decades has catered to big companies and banks, but going forward will also seek out work from hedge funds including Pershing Square and Sachem Head Capital Management LP, a Pershing Square spinout and another client of Mr. Brand’s. To date, few major law firms or Wall Street banks have tried to represent both corporations and activist investors, who generally take positions in companies and push for changes to drive up share prices. Most big law firms instead cater exclusively to companies, worried that lining up with activists will offend or scare off executives or create conflicts that could jeopardize future assignments. Some are dabbling in both camps. Paul, Weiss, Rifkind, Wharton & Garrison LLP, for example, represented Trian Fund Management LP in its recent proxy fight at DuPont Co. and also is steering Time Warner Cable Inc.’s pending sale to Charter Communications Inc. Willkie Farr & Gallagher LLP and Gibson, Dunn & Crutcher LLP have done work for activist firm Third Point LLC. But most firms are more monogamous. Those on one end, most vocally Wachtell, Lipton, Rosen & Katz, defend management, while a small band including Schulte Roth & Zabel LLP and Olshan Frome Wolosky LLP primarily represent activists. In embracing activist work, Cadwalader thinks it can serve both groups better, said Christopher Cox, chairman of the firm’s corporate group. “Traditional M&A and activism are becoming increasingly intertwined,” Mr. Cox said in an interview. “To be able to bring that perspective to the boardroom is a huge advantage. And when a threat does emerge, who’s better to defend a company than someone who’s seen it from the other side?” Mr. Cox said Cadwalader has been thinking about branching out into activism since late last year. The firm is also working with an activist fund launched earlier this year by Cadwalader’s former head of M&A, Jim Woolery, that hopes to take a friendlier stance toward companies. Mr. Cox also said he believes activism can be lucrative, pooh-poohing another reason some big law firms eschew such assignments—namely, that they don’t pay as well as, say, a large merger deal. “There is real money in activism today,” said Robert Jackson, a former lawyer at Wachtell and the U.S. Treasury Department who now teaches at Columbia University and who also notes that advising activists can generate regulatory work. “Law firms are businesses, and taking the stance that you’ll never, ever, ever represent an activist is a financial luxury that only a few firms have.” To be sure, the handful of law firms that work for both sides say they do so

On April 29, Secretary of the Treasury Morgenthau, whom Roosevelt had asked to answer Kennedy’s four-page letter, assembled his chief advisers for a 10:15 meeting. “Now, the reason I have got you fellows in here, this is extra confidential. I got one of these typical Joe Kennedy letters to the President on gold. . . . It is one of these typical asinine Joe Kennedy letters.” Morgenthau was opposed to Kennedy’s recommendation that the British be pressured to sell their securities to fund the war effort, because he feared that dumping those securities on the market would result in a dramatic fall of American stock prices.

What are the future prospects for a country that turns from the economic and political principles that made it the world’s economic giant, and towards the European socialist state philosophy?  Who would have ever thought that the world’s leading free enterprise, free market nation would: a.) nationalize its banks; b.) replace the CEO of the nation’s largest industrial corporation by demand of the White House; c.) force itself into a position of majority ownership of that corporation and default on bondholders; d.) force the CEO of the nation’s largest bank to buy a company that could destroy the bank, and then force the CEO to lie to shareholders about the transaction, at the demand of the Secretary of the Treasury and the Chairman of the Federal Reserve?

To understand what that means in commonsense terms, consider a person who plans to live off the income from $1 million invested in T-bills. Suppose he retires in a given year and converts his investments into an inflation-protected annuity with a return of 4% to 5%. He will receive an annual income of $40,000 to $50,000. But now suppose he retires a few years later, when the return on the annuity has dropped to 0.5%. His annual income will now be only $5,000. Yes, the $1 million principal amount was fully insured and protected, but you can see that he cannot possibly live on the amount he will now receive. T-bills preserve principal at all times, but the income received on them can vary enormously as return on the annuity goes up or down. Had the retiree bought instead a long-maturity U.S. Treasury bond with his $1 million, his spendable income would be secure for the life of the bond, even though the price of that bond would fluctuate substantially from day to day. The same holds true for annuities: Although their market value varies from day to day, the income from an annuity is secure throughout the retiree’s life.

Silber, the real reason the exchange was shut, and the reason the U.S. Treasury was involved, was not stock prices but gold. European sellers were entitled to convert their sales proceeds into gold at the U.S. subtreasury building located on Wall Street across from the exchange.

Given the difficulty of quantifying the probability of loss, investors who want some objective measure of risk-adjusted return—and they are many—can only look to the so-called Sharpe ratio. This is the ratio of a portfolio’s excess return (its return above the “riskless rate,” or the rate on short-term Treasury bills) to the standard deviation of the return. This calculation seems serviceable for public market securities that trade and price often; there is some logic, and it truly is the best we have. While it says nothing explicitly about the likelihood of loss, there may be reason to believe that the prices of fundamentally riskier securities fluctuate more than those of safer ones, and thus that the Sharpe ratio has some relevance. For private assets lacking market prices—like real estate and whole companies—there’s no alternative to subjective risk adjustment.

For most investors, bond funds beat individual bonds hands down (the main exceptions are Treasury securities and some municipal bonds). Major firms like Vanguard, Fidelity, Schwab, and T. Rowe Price offer a broad menu of bond funds at low cost.9

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.”43

But during the Punic Wars (264 to 146 B.C.), a century-long struggle-to-the-death for control of the Mediterranean with the Phoenician colony of Carthage, Rome manipulated salt prices to raise money for the war. In the fashion of the Chinese emperors, the Roman government declared an artificially high price for salt and put the profits at the disposal of the military. A low price was still maintained in the city of Rome, but elsewhere a charge was added in accordance with the distance from the nearest saltwork. This salt tax system was devised by Marcus Livius, a tribune, a government official representing plebeians. Because of his salt price scheme, he became known as the salinator, which later became the title of the official in the treasury who was responsible for decisions about salt prices.

Rather than accumulating the position in the secondary market, borrowing the securities from clients, or buying in the term Repo market, why not just buy the securities right from the start? Why accumulate securities in the secondary market and drive-up prices when you can just buy them directly from the Treasury? Buy the entire new Treasury issue and eliminate the middle-men! Not a bad idea!

once the issue settled, Tiger and Quantum agreed to have Salomon manage their positions. Salomon had complete control of the entire 2 Year Note. By the middle of May, it was clear there was something wrong. The 2 Year Note’s price was completely distorted; it was trading extremely rich and the yield was extremely low. There was no squeeze in the Repo market, however, because Salomon loaned the securities into the market each day. This created one of the strangest squeezes ever. There was no shortage in the Repo market, but there was a huge premium in the cash market. As the squeeze in the April 2 Year Note continued, Salomon submitted large bids again for the next 2 Year Note settling at the end of May. They were able to accumulate an abnormally large position once again. Prices across the entire 2 year sector were now distorted. Prices were abnormally high and yields were abnormally low. Everyone knew that Salomon had the issue and Salomon was not selling. At this point, all of the trading in the market was from one short seller to another. There were no real owners selling. All of the buyers were existing short-sellers who had ridden their losses as far as they could go and got stopped out. All of the sellers were new short-sellers willing to take short positions and higher and higher prices. There was no way for the squeeze to end without Salomon selling. What was Salomon’s goal? They had already achieved a very successful squeeze. Prices moved in their favor and they had a huge win under their belt. The biggest short-squeeze of all time! However, in July things started to unravel. Market participants started complaining to the Fed. Everyone knew that Salomon owned the entire issue. The Fed passed the information to the Treasury Department. Treasury then passed it to the SEC, who immediately launched an investigation. By the end of July, it was all over.

Treasury Bills The simplest, safest way to generate future cash from current cash is to buy a short-term, three-month Treasury bill. The purchase price you pay is loaned to the government, which in return promises to pay you a guaranteed rate of interest for three months and then return your principal. Because it is very unlikely that the U.S. Treasury will not be around to repay you three months later, the investment is close to riskless and therefore pays a low rate of interest. Its return serves as a benchmark for riskier securities, which must promise to pay more.

And another sort of backlash—less direct, but undoubtedly more serious in human terms—was being felt in some of the poorer countries of the world. For example, the price of copper for July delivery dropped on the New York commodity market by forty-four one-hundredths of a cent per pound. Insignificant as such a loss may sound, it was a vital matter to a small country heavily dependent on its copper exports. In his recent book “The Great Ascent,” Robert L. Heilbroner had cited an estimate that for every cent by which copper prices drop on the New York market the Chilean treasury lost four million dollars; by that standard, Chile’s potential loss on copper alone was $1,760,000.

Yet, like more recent mega-corporations, the EIC proved at once hugely powerful and oddly vulnerable to economic uncertainty. Only seven years after the granting of the Diwani, when the Company’s share price had doubled overnight after it acquired the wealth of the treasury of Bengal, the East India bubble burst after plunder and famine in Bengal led to massive shortfalls in expected land revenues. The EIC was left with debts of £1.5 million and a bill of £1 million* in unpaid tax owed to the Crown. When knowledge of this became public, thirty banks collapsed like dominoes across Europe, bringing trade to a standstill.

In their struggle with al-Qaeda, the Al Saud benefited from several favorable circumstances. The Saudi state was highly centralized, backed by important allies, and determined to hold on to power. A state-controlled media and consolidated education system got out the message that al-Qaeda members were criminals, not heroes. Oil prices were high and the Saudi treasury full. The war in Iraq drew militants away from Riyadh. In a very conservative society, revolution was never likely to be popular and, as we have seen, the Al Saud made some deliberate, and ultimately effective, choices. Unlike the rulers of Algeria, Egypt, Iran, Iraq, Libya, or Syria, the Saudi government did not turn the army on its own people. Torture was officially abandoned. Collective punishment of families and tribes was avoided. Less dangerous terrorists were treated more as prodigal sons than criminals. Police officers attended the weddings of released terrorists to indicate that they were still part of the community. In a deeply religious society, al-Qaeda was delegitimized in religious terms by respected theologians.

In his recent book “The Great Ascent,” Robert L. Heilbroner had cited an estimate that for every cent by which copper prices drop on the New York market the Chilean treasury lost four million dollars; by that standard, Chile’s potential loss on copper alone was $1,760,000.

The war is actually begun! The next gale that sweeps from the north will bring to our ears the clash of resounding arms! Our brethren are already in the field! Why stand we here idle? What is it that gentlemen wish? What would they have? Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery? Forbid it, Almighty God! I know not what course others may take; but as for me, give me liberty, or give me death!

Put simply, if both a U.S. Treasury note and small company stock appeared likely to return 7 percent per year, everyone would rush to buy the former (driving up its price and reducing its prospective return) and dump the latter (driving down its price and thus increasing its return). This process of adjusting relative prices, which economists call equilibration, is supposed to render prospective returns proportional to risk.

From 1942 until 1947, the Federal Reserve—at the behest of the Treasury Department—actively managed the government’s borrowing costs. Even as spending to fight World War II drove the federal deficit to more than 25 percent of GDP in 1943, interest rates trended lower. That’s because the Fed pegged the T-bill rate at 0.375 percent and held the rate on twenty-five-year bonds at 2.5 percent. As MMT economist L. Randall Wray put it, “the government can ‘borrow’ (issue bonds to the public) at any interest rate the central bank chooses to enforce. It is relatively easy for the central bank to peg the interest rate on short-term government debt instruments by standing ready to purchase it at a fixed price in unlimited quantities. This is precisely what the Fed did in the United States until 1951—providing banks with an interest-earning alternative to excess reserves, but at a very low rate of interest.

In fact, some investment advisors say the only completely safe bond is one backed by the full faith and credit of the United States. And you can actually buy US bonds called Treasury inflation-protected securities, or TIPS, that rise in value to keep up with inflation through the consumer price index.

Yet, like more recent mega-corporations, the EIC proved at once hugely powerful and oddly vulnerable to economic uncertainty. Only seven years after the granting of the Diwani, when the Company’s share price had doubled overnight after it acquired the wealth of the treasury of Bengal, the East India bubble burst after plunder and famine in Bengal led to massive shortfalls in expected land revenues.

An inverse relationship exists between efficiency in asset pricing and appropriate degree of active management. Passive management strategies suit highly efficient markets, such as U.S. Treasury bonds, where market returns drive results and active management adds little or nothing. Active management strategies fit inefficient markets, such as private equity, where market returns contribute very little to ultimate results and investment selection provides the fundamental source of return.

Investors would buy shares in their fund. The fund would then take investors’ money and lend it out—to the government, in the form of Treasury bills, and to banks, in the form of big savings accounts. These were short-term, ultra-safe investments. So safe, in fact, that the price of the mutual fund shares didn’t need to fluctuate every day like funds that owned stocks or riskier bonds.