--- title: Why Are People Lending Money to the Government for Free? description: People have sunk over $1 trillion dollars into Treasury bills that have no yield, which is a free loan. Why?! authors: - name: Ethan Wolff-Mann url: https://money.com/author/ethan-wolff-mann/ at_money_since: 2015 articles: 160 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Education - Housing - Identity Theft - Insurance - Investing - Lifestyle - Personal Finance - Professional Services - Shopping - Taxes - Technology social: - https://x.com/ewolffmann former_staff: true published: '2015-10-16T15:01:09.000Z' modified: '2024-05-07T10:16:40.000Z' section: Economy and Politics tags: - bonds - Debt - Government - Investing word_count: 346 canonical: https://money.com/why-are-people-lending-money-to-the-government-for-free/ type: Article source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![uncle sam taking money out of wallet](https://img.money.com/2015/10/151015_inv_lendingtogov.jpg?crop=0px%2C53px%2C2100px%2C1182px&quality=85) For a few days this week, three-month Treasury bills sold with a 0% yield. That's right: They offered absolutely no returns. And yet, people keep buying them. As the *Wall Street Journal* noted Thursday morning, [$1.17 trillion has been issued at 0% interest](http://www.wsj.com/articles/1-17-trillion-at-zero-percent-interest-1444863388)—a free loan for the government. Handing out loans for zero return doesn't seem like a good investing strategy. So why are people doing it? ### People aren't just trying to do Uncle Sam a solid. And they aren't suckers, either. The goal of investing in a short-term T-bill isn't necessarily a strong return, but rather to have a free place to store cash. This isn't for really for individuals, who would just put the excess cash in the bank, but rather for a large corporation or enterprise that needs to keep *a lot* of money safe—more than the FDIC will insure. Lending to the U.S. is like lending to the House Lannister. Since [Alexander Hamilton founded the American financial system](https://www.youtube.com/watch?v=mBmTdJ4XTfs), the U.S. has always paid its debts. ### It's partly about supply... The 0% rate of return isn't usual, but it's been brought on by the familiar forces of supply and demand. To understand what's going on, it's helpful to remember what a bond is: It's just the government borrowing money. Remember [the sequester of 2013](https://www.whitehouse.gov/issues/sequester) that curbed government spending? Well, government spending [hasn't really gone back up](https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/50724-Update-OneColumn_1.pdf) that much in the years following, meaning the government needs to borrow less, and thus issue fewer bonds. ### ... but demand for safe assets is high, too. Ever since the 2008 financial crisis, investors around the world have put a premium on safe assets. The fact that people are willing to put money in zero-yield short-term bills doesn't say much besides the fact that they like having cash for short-term needs. What's really pulled short-term debt down to zero is that even longer-term government bonds are hardly paying anything. Investors snapping up 30-year Treasury bonds have driven yields on those bonds down to just 2.8%. This suggests investors have [a lot of anxiety](https://money.com/page/how-low-yields-explain-world/) about long-term economic growth. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/why-are-people-lending-money-to-the-government-for-free/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Economy and Politics", "item": "https://money.com/economy-and-politics/" }, { "@type": "ListItem", "position": 3, "name": "Inflation", "item": "https://money.com/inflation/" }, { "@type": "ListItem", "position": 4, "name": "Why Are People Lending Money to the Government for Free?" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/why-are-people-lending-money-to-the-government-for-free/#webpage", "url": "https://money.com/why-are-people-lending-money-to-the-government-for-free/", "name": "Why Are People Lending Money to the Government for Free?", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2015-10-16T15:01:09.000Z", "mainEntity": { "@id": "https://money.com/why-are-people-lending-money-to-the-government-for-free/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/why-are-people-lending-money-to-the-government-for-free/#breadcrumb" }, "dateModified": "2024-05-07T10:16:40.000Z" }, { "@type": "Article", "headline": "Why Are People Lending Money to the Government for Free?", "articleSection": "Economy and Politics", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2015/10/151015_inv_lendingtogov.jpg?crop=0px%2C53px%2C2100px%2C1182px&quality=85", "width": 1012, "height": 569, "caption": "151015_INV_LendingtoGov" } ], "author": [ { "@type": "Person", "name": "Ethan Wolff-Mann", "url": "https://money.com/author/ethan-wolff-mann/", "@id": "https://money.com/author/ethan-wolff-mann/#author", "sameAs": [ "https://x.com/ewolffmann" ] } ], "publisher": "https://money.com/#organization", "datePublished": "2015-10-16T15:01:09.000Z", "description": "People have sunk over $1 trillion dollars into Treasury bills that have no yield, which is a free loan. 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