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Are you concerned about a liquidity crisis? Treasury Direct Securities


Silver Member
Silver Miner
Site Supporter
Apr 2, 2010
I have noticed quite a few opinionated articles these days about a liquidity crisis caused by investor's in passive index funds all running for the exits in a down market. There are other potential problems associated due to high-frequency trading and government regulation. You ca read more on it all here


Thinking about this I decided to eliminate one of my indexed bond funds in favor of investing directly through the Federal Reserve Bank. Years ago I used to do this when one had to go to one of the banks but today it is much simpler and the minimum amounts have dropped to 1000.00 increments for bills and 100.00 for notes One can buy 13, 26 and 52 week bills and assorted maturity notes. Since I was replacing a mid term bond fund I purchased and/or placed bids in equal amounts of a 13 week, 26 week and 52 week bills along with a 2 year and a 3 year note. Like the Federal Reserve or not its securities are considered the safest game in town by most investors. When one bids generally individuals like me with smaller investments one simply places a non competitive bid and is awarded the security with the average rate that the bigger investors get. Last week on a 26 week bill I received the equivalent of an annual 2.12% return. In comparison my local bank currently offers a .008 annualized return for a CD during the same period. I might add that Income from bonds issued by the federal government and its agencies, including Treasury securities, is generally exempt from state and local taxes; a definite benefit for those in high income tax states.

I can not get the web to inbed here, but this link will tell you all that you need to know. For those of us that are skittish about things 13 week T Bills are considered pretty darned secure. Years ago one had to have serious money to invest in bills, but the current 1000 dollar minimum is quite intriguing. After all it is less than 1 oz of the hard stuff we buy here and it does pay interest. I also opened a savings account at the local bank to use as my trading platform making it easy to keep things easy. I might add with a mutual fund/etf your principal can fluctuate but on a treasury security the investment does not change.



Treasury Securities & Programs
U.S. Treasury securities are a great way to invest and save for the future. Here, you'll find overviews regarding U.S. Treasury bonds, notes, bills, TIPS, and Floating Rate Notes (FRNs), as well as U.S. Savings Bonds.

Treasury Securities
Here's what's available:

Treasury Bills
Treasury bills are short-term government securities with maturities ranging from a few days to 52 weeks. Bills are sold at a discount from their face value.

Treasury Notes
Treasury notes are government securities that are issued with maturities of 2, 3, 5, 7, and 10 years and pay interest every six months.

Treasury Bonds
Treasury bonds pay interest every six months and mature in 30 years.

Treasury Inflation-Protected Securities (TIPS)
TIPS are marketable securities whose principal is adjusted by changes in the Consumer Price Index. TIPS pay interest every six months and are issued with maturities of 5, 10, and 30 years.

Floating Rate Notes (FRNs)
Interest payments on an FRN rise and fall based on discount rates for 13-week Treasury bills. FRNs are issued for a term of 2 years and pay interest quarterly.

I Savings Bonds
I Savings Bonds are a low-risk savings product that earn interest while protecting you from inflation. Sold at face value. Check out our table that is a comparison of TIPS and Series I Savings Bonds.

EE and E Savings Bonds
EE and E Savings Bonds are a secure savings product that pay interest based on current market rates for up to 30 years. Electronic EE Savings Bonds are sold at face value in TreasuryDirect.

Treasury Securities Programs
If you are interested in electronic payroll savings, or are looking to find out more about auctions, you can also find the necessary details here: