Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
U.S. Treasury Money Market Funds
Old 06-06-2010, 07:34 PM   #1
Full time employment: Posting here.
antmary's Avatar
 
Join Date: Mar 2008
Location: Northern California
Posts: 542
U.S. Treasury Money Market Funds

I have all my funds (other than banking) in Vanguard, and up to now have been a dyed-in-the-wool Boglehead. As you may know, the Vanguard U.S. Treasury Money Market fund closed quite awhile ago. Fidelity and Schwab are also closed as of late 2008. Gabelli does have a U.S. Treasury Money Market fund that is now open.

Can anyone recommend Gabelli? I know that Bob Brinker includes Gabelli funds in his model portfolios.

The reason I ask is this: my brother, who is a retired economist, called me a few days ago. He is very methodical, thorough, and low-key. He has never ever given me advice, or even inquired about how I am doing financially. He called every one of us siblings and told us that he thought that he needed to pass on the results of his research. He thinks that we are in for a depression in the near future, and that I should move my cash, stocks, and non-treasury bonds to U.S. Treasury funds; do not keep large amounts in a FDIC-insured bank. The vulnerability of the economy, according to him, may cause an extreme strain at the FDIC.

I usually take financial information with a grain of salt, but this time, I have been pondering his words for several days. Quite frankly, it is quite rattling to have anyone call with this sort of information.

Any thoughts?
__________________

__________________
antmary is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-06-2010, 07:37 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,387
Quote:
Originally Posted by antmary View Post
I have all my funds (other than banking) in Vanguard, and up to now have been a dyed-in-the-wool Boglehead. As you may know, the Vanguard U.S. Treasury Money Market fund closed quite awhile ago. Fidelity and Schwab are also closed as of late 2008. Gabelli does have a U.S. Treasury Money Market fund that is now open.

Can anyone recommend Gabelli? I know that Bob Brinker includes Gabelli funds in his model portfolios.

The reason I ask is this: my brother, who is a retired economist, called me a few days ago. He is very methodical, thorough, and low-key. He has never ever given me advice, or even inquired about how I am doing financially. He called every one of us siblings and told us that he thought that he needed to pass on the results of his research. He thinks that we are in for a depression in the near future, and that I should move my cash, stocks, and non-treasury bonds to U.S. Treasury funds; do not keep large amounts in a FDIC-insured bank. The vulnerability of the economy, according to him, may cause an extreme strain at the FDIC.

I usually take financial information with a grain of salt, but this time, I have been pondering his words for several days. Quite frankly, it is quite rattling to have anyone call with this sort of information.

Any thoughts?
It is easy, cheap, and free at most brokerages to invest directly in treasury bills and notes. Or, you can remove your money from the brokerage ane use a (free)Treasury Direct Account.

Ha
__________________

__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 06-06-2010, 07:49 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,627
You can buy up to $5 million of Treasury instruments at Monday and Tuesday auctions. You don't need to use a money market middleman. 4-, 13-, 26-week issues are available.

But being the contrarian that I am, I will take all my available cash and buy equities this next week.
__________________
LOL! is offline   Reply With Quote
Old 06-06-2010, 08:44 PM   #4
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,613
I personally don't believe that the U.S. government would ever allow the FDIC to fail. I think that in the absence of FDIC backing, the 2008-09 depression (and yes, I consider it a depression, even if muted compared to THE Depression) would have been a LOT worse than it was. Giving the FDIC a blank check to keep depositors whole may cause some economic problems, but none nearly so big as "bank runs" on marginally solvent banks caused in the 1930s.

I think the entire country would have to go belly up into guns-and-ammo anarchy before the U.S. government would allow the FDIC to default on its promises. I think its role in maintaining confidence is that critical.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 06-06-2010, 09:31 PM   #5
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
Quote:
Originally Posted by ziggy29 View Post
I personally don't believe that the U.S. government would ever allow the FDIC to fail. I think that in the absence of FDIC backing, the 2008-09 depression (and yes, I consider it a depression, even if muted compared to THE Depression) would have been a LOT worse than it was. Giving the FDIC a blank check to keep depositors whole may cause some economic problems, but none nearly so big as "bank runs" on marginally solvent banks caused in the 1930s.

I think the entire country would have to go belly up into guns-and-ammo anarchy before the U.S. government would allow the FDIC to default on its promises. I think its role in maintaining confidence is that critical.
+1. If I doubted the solvency of the FDIC (and its full backing by the US government), then I would think twice before investing my money in US treasuries as well.
__________________
FIREd is offline   Reply With Quote
Old 06-06-2010, 10:07 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,699
Quote:
Originally Posted by FIREdreamer View Post
+1. If I doubted the solvency of the FDIC (and its full backing by the US government), then I would think twice before investing my money in US treasuries as well.
Has the US government issued a statement at some point it is backing the FDIC whether or not it goes bust or is this an assumption by the market?
__________________
Running_Man is offline   Reply With Quote
Old 06-06-2010, 10:24 PM   #7
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
Quote:
An FDIC-insured deposit is backed by more than just the insurance fund. It carries a full faith and credit pledge of the U.S. government. I view the full faith and credit pledge as the government stating, "We'll do what it takes to make you whole on your FDIC-insured investment."

Congress said it a bit more eloquently with the passage of the Competitive Equality Banking Act of 1987, known as CEBA, that was signed into law by President Reagan Aug. 10, 1987.

Title IX: Full Faith and Credit of Federally Insured Financial Depository Institutions -- Expresses the sense of the Congress to reaffirm that deposits, up to the statutorily prescribed amount, in federally-insured depository institutions are backed by the full faith and credit of the United States.





http://www.bankrate.com/finance/depo...-deposits.aspx
__________________
FIREd is offline   Reply With Quote
Old 06-06-2010, 10:35 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,699
Quote:
This excerpt from a FDIC advisory opinion written in November 1987 and presented on the FDIC Web site sounds a cautionary note about reading too much into the guarantee afforded by CEBA:
While any final conclusion on this matter rests with the Attorney General of the United States and ultimately with the courts, it is our opinion that Title IX of CEBA merely represents an expression of the intent of Congress to support the FDIC's deposit insurance fund should the need arise. Title IX does not change any existing underlying law. It does not amend the Federal Deposit Insurance Act, nor does it or any other provision of CEBA alter the method by which the FDIC is funded. The FDIC continues to receive no government appropriations, and its funding continues to consist entirely of its income obtained from insurance assessments and from the return on investments made in government securities. In addition, the FDIC's statutory authority to borrow up to $3 billion from the Treasury remains unchanged.
Ok it is what I thought there is an implied not explicit guarentee of the FDIC with no legal way to make it occur. It requires an act of Congress to actual re-fund the FDIC. Thank you for the post,
__________________
Running_Man is offline   Reply With Quote
Old 06-06-2010, 11:08 PM   #9
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 943
Quote:
Originally Posted by antmary View Post
do not keep large amounts in a FDIC-insured bank. The vulnerability of the economy, according to him, may cause an extreme strain at the FDIC.

Sorry but this is utter nonsense. There is ZERO probability that the US government will allow an insured institution's deposits to not be honored.

To suggest monies are not safe at an insured institution (assuming below limits) is ridiculous. Full Stop.

There are many areas to be worried about, but this is not one of them.
__________________
LARS is offline   Reply With Quote
Old 06-06-2010, 11:21 PM   #10
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,949
Quote:
Originally Posted by LARS View Post
Sorry but this is utter nonsense. There is ZERO probability that the US government will allow an insured institution's deposits to not be honored.

To suggest monies are not safe at an insured institution (assuming below limits) is ridiculous. Full Stop.

There are many areas to be worried about, but this is not one of them.
I would say it is extremely unlikely for anyone to lose money in an FDIC insured account, and money in such an account is perhaps safer than anywhere else other than under the mattress. Or maybe it is safer than under the mattress, too, depending on the crime rate in one's neighborhood.

Still, I think it's judicious to never say never, especially after what we saw in 2008-2009.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Old 06-06-2010, 11:23 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,294
Quote:
Originally Posted by FIREdreamer View Post
+1. If I doubted the solvency of the FDIC (and its full backing by the US government), then I would think twice before investing my money in US treasuries as well.

Plus 2.... if the FDIC fails, so will your treasuries... they are the same...
__________________
Texas Proud is online now   Reply With Quote
Old 06-06-2010, 11:27 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,294
Quote:
Originally Posted by W2R View Post
I would say it is extremely unlikely for anyone to lose money in an FDIC insured account, and money in such an account is perhaps safer than anywhere else other than under the mattress. Or maybe it is safer than under the mattress, too, depending on the crime rate in one's neighborhood.

Still, I think it's judicious to never say never, especially after what we saw in 2008-2009.

If the gvmt is willing to pay hundreds of billions of dollars to prop up institutions they do NOT have any obligation to prop up... I do not see them not backing the FDIC for a few billion...

There are a few hundred banks that might fail over the next two years... all combined are not that big a deal... (at least when we talk US spending)...
__________________
Texas Proud is online now   Reply With Quote
Old 06-06-2010, 11:34 PM   #13
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 943
Quote:
Originally Posted by W2R View Post
I would say it is extremely unlikely for anyone to lose money in an FDIC insured account, and money in such an account is perhaps safer than anywhere else other than under the mattress. Or maybe it is safer than under the mattress, too, depending on the crime rate in one's neighborhood.

Still, I think it's judicious to never say never, especially after what we saw in 2008-2009.
I will say it again. There is ZERO chance anyone will lose any deposit monies (assuming within limits) in an FDIC insured institution. The US Government will NEVER let it happen. End of story... move on to the next worry.

There's a greater chance a Martian will hack your bank accounts...
__________________
LARS is offline   Reply With Quote
Old 06-07-2010, 12:03 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,387
Quote:
Originally Posted by Texas Proud View Post
Plus 2.... if the FDIC fails, so will your treasuries... they are the same...
This is not really true. Look above. It may well be rue that no one will lose money in an insured institution, but they are not the same.
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 06-07-2010, 12:42 AM   #15
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 2,726
Quote:
Originally Posted by Texas Proud View Post
Plus 2.... if the FDIC fails, so will your treasuries... they are the same...
Actually to go a step further currency will also fail at the same time, as this implies a complete lack of confidence in the government. If one truly believes this gold and silver coins are the only way out. Also figure on riots civil commotion and martial law or the equivalent, so you better plan on moving deep into the wilderness, as roving gangs will be killing for food and the like.
Domestic borrowings are easily fixed if you own an electronic printing press.
__________________
meierlde is offline   Reply With Quote
Old 06-07-2010, 08:03 AM   #16
Full time employment: Posting here.
antmary's Avatar
 
Join Date: Mar 2008
Location: Northern California
Posts: 542
Quote:
Originally Posted by LARS View Post
Sorry but this is utter nonsense. There is ZERO probability that the US government will allow an insured institution's deposits to not be honored.

To suggest monies are not safe at an insured institution (assuming below limits) is ridiculous. Full Stop.

There are many areas to be worried about, but this is not one of them.
I would like to think that there is zero probability that my bank's deposits would not be honored. I stay away from the panic-ridden writings I hear about from time-to-time (e.g. books and newsletters); it is much better for my spirit to simply buy, hold, and re-balance my asset allocation as time goes along - and, to trust that my bank accounts are safe.

But, my brother doesn't write books or publish newsletters; he has no financial reason to "peddle fear." He spends his time analyzing the markets, etc. I do respect his 40+ years of research. What is odd to me is, simply, is the fact hat he did take the time and effort to call every one of us siblings seemingly out of the blue. Hopefully, he is simply misinformed.
__________________
antmary is offline   Reply With Quote
Old 06-07-2010, 08:07 AM   #17
Full time employment: Posting here.
antmary's Avatar
 
Join Date: Mar 2008
Location: Northern California
Posts: 542
Quote:
Originally Posted by ziggy29 View Post
I personally don't believe that the U.S. government would ever allow the FDIC to fail. I think that in the absence of FDIC backing, the 2008-09 depression (and yes, I consider it a depression, even if muted compared to THE Depression) would have been a LOT worse than it was. Giving the FDIC a blank check to keep depositors whole may cause some economic problems, but none nearly so big as "bank runs" on marginally solvent banks caused in the 1930s.

I think the entire country would have to go belly up into guns-and-ammo anarchy before the U.S. government would allow the FDIC to default on its promises. I think its role in maintaining confidence is that critical.
I hope that never happens. I can't shoot worth a darn.
__________________
antmary is offline   Reply With Quote
Old 06-07-2010, 08:08 AM   #18
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,151
Quote:
Originally Posted by antmary View Post
I hope that never happens. I can't shoot worth a darn.
I can shoot just fine - unless someone is shooting back.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 06-07-2010, 08:12 AM   #19
Full time employment: Posting here.
antmary's Avatar
 
Join Date: Mar 2008
Location: Northern California
Posts: 542
Quote:
Originally Posted by FIREdreamer View Post
+1. If I doubted the solvency of the FDIC (and its full backing by the US government), then I would think twice before investing my money in US treasuries as well.
He said to put my money in treasuries, and re-assess in a couple of years. But, I really don't think the government would allow the FDIC to default due to security reasons. He also said that now is a good time to sell my gold, because it will tank along with stocks.
__________________
antmary is offline   Reply With Quote
Old 06-07-2010, 08:18 AM   #20
Full time employment: Posting here.
antmary's Avatar
 
Join Date: Mar 2008
Location: Northern California
Posts: 542
Quote:
Originally Posted by Texas Proud View Post
Plus 2.... if the FDIC fails, so will your treasuries... they are the same...
My brother seemed to think that Treasuries are a bit safer.
__________________

__________________
antmary is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Money market funds 101 freebird5825 FIRE and Money 0 08-20-2009 10:08 AM
Closing of VG Treasury Money Market Red Rover Stock Picking and Market Strategy 8 01-31-2009 10:50 PM
Vanguard MM funds participate in Treasury Guarantee Program Gone4Good FIRE and Money 1 10-25-2008 12:50 PM
Money market funds not always safe wcv56 Stock Picking and Market Strategy 3 12-12-2007 12:30 AM
Treasury Direct -- can't get my money out JB FIRE and Money 26 07-03-2006 03:27 PM

 

 
All times are GMT -6. The time now is 10:18 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.