# 🍃 Treasury Bill

By [Let Them Eat Cake](https://paragraph.com/@ltecake) · 2022-06-21

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**TL,DR: Like lettuce, lacking substance**

Treasury Bills / Lettuce

*   lacking substance
    
*   short lifespan
    
*   safe and mildly nutritious
    

Eatamology

“T-Bills” or “Bills” for short refer to the hard copy form of these bonds, which looks very much like a dollar bill, and which was created by President Hoover at the start of the Great Depression to raise money for the government when tax income dropped dramatically. The Department of the Treasury, a division of the Executive Branch (which is controlled by POTUS), exists to pay government bills, collect taxes, and print money. Issuing treasury bills via public auctions allowed the Treasury to raise additional money and meet it’s financial obligations.

Financials

T Bills are available via auction or on the secondary market as 3 month, 6 month, 9 month, and 1 year maturity bonds. If the Treasury issues debt maturing in <1 year, it is always considered a Bill. Since the bonds are backed by the “full faith and credit” of the U.S. Government, and will be paid back within a year, the bonds carry little to no risk and pay little to no interest. While not attractive to everyday “retail” investors, institutional investors often use Bills to lend each-other money overnight, in the form of a repurchase agreement or “repo”. Additionally, these bonds are often sold with zero coupon.

Full Faith and Credit / Satisfaction Back Guarantee

Like a product guarantee, treasury bonds come with assurances from the U.S. government, and could only default if the U.S. Treasury went bankrupt and lost its ability to print money. While not impossible, most people agree this will never happen.

Retail Investor / Regular Customer

This seems self explanatory

Institutional Investor / Restaurant or Business

Institutional investors could be insurance companies, banks, or any other large institution that behaves differently the everyday customers, and deals in much larger sums.

Repo / Overnight Produce Loan between Grocers

When a grocery store has excess lettuce but it’s refrigerators are full, it needs a place for storage. Especially if an inspector plans to visit the facility. In these situations, the grocer may loan the produce to a neighboring store that has excess space, in exchange for a small fee. After the inspection, they can buy back the lettuce. Regulators have capital reserve requirements for banks, and force them to perform similar transactions called repos, where cash and bills are exchanged briefly to avoided regulatory scrutiny.

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*Originally published on [Let Them Eat Cake](https://paragraph.com/@ltecake/treasury-bill)*