U.S. Treasuries Worse than the Dollar

That’s right. You read it correctly. Now why would I say something that even most “experts” would laugh at? 

Because I want to point out once again how so many out there are in the dark, even the so-called experts; you remember, the guys who missed this entire meltdown.

Of course, now with so many banks in a dangerous position, I’ve seen many advisers change face and jump on the doom bandwagon. Some have advised investors to remove their money from banks and buy U.S. Treasuries as a safer investment. The rational goes as follows. “U.S. Treasuries are backed by the full faith and credit of the U.S. Government and they have never defaulted.” 

The first point I’d like to make is this….there’s always a first time. Prior to the present, the MBS market never blew up either. And it’s obvious to any sophisticated investor that the credit risk for U.S. Treasuries continues to increase. While it could take some time, the fact is that the FDIC will cover all bank deposits that do not exceed the $100,000 limit. After all, the FDIC is a government agency.

So can we not say that it too is backed by the full faith and credit of the U.S. government? Sure we can because it’s a fact. So as far as safety of principal, the FDIC is equal to U.S. Treasury securities.

Now let’s look at the disadvantages of buying U.S. Treasuries.