Want to loan Uncle Sam some money?

I knew that rates on Treasury instruments were low, but the actual situation was illustrated when I visited the U.S. Treasury Department’s Daily Real Yield Curve page. I discovered this little gem while reading an article at Slate.

As of yesterday, if you loaned money to Uncle Sam for five years, your interest rate would be about -1%. That’s a negative sign. If you let him keep it for ten years, he would give you back almost as much as you loaned (interest rate -.01%). These are inflation-adjusted rates and we don’t know what the rate of inflation will be, but the point is clear. As the author of the Slate article puts it,

People take out mortgages, for example, rather than buying houses with credit cards. When mortgage rates fall, there’s a rush to refinance. Cheap money is better than expensive money. But what you never get is an offer of free money. The idea, always, is that someone will give you some money today and in exchange you have to give him back more money later on. Unless, that is, you’re the government of the United States of America, and lenders are willing to pay for the privilege of lending you money.

I downloaded a bit of ancient history from the Treasury Department and found rates over 15% in the early 1980s. This too will pass, just as that did. In the meantime, I won’t be buying any Treasury instruments.