Buffett on 0% interest rates

[jeffrey]

Last tuesday the U.S. Treasury sold $32 billion in 4-week bills with a yield of 0%. Warren Buffet sent the following message to the directors of Berkshire Hathaway upon hearing this news:

This should be bullish for Berkshire. With great foresight, I long ago entered the mattress business in a big way through our furniture operation. Now mattresses have become fully competitive as a place to put your money, and sales will soon take off.

Source

[disneysteve]

Mattresses are an even better place for your cash because you maintain full liquidity. Mr. Buffet is a smart man.

[sweeps]

Mattresses are worse because of risk of theft or loss due to fire.

[Investing First Steps]

Mattresses also fulfill a need. Namely a place to sleep. You can not sleep on 0 yield T-Bills. At least not comfortably. And as of recently I'm not sure they're that much safer from calamity than the mattress.

[sweeps]

Oh I don't know. I think I'd sleep pretty comfortably on a huge pile of T-Bills.

[Broken Arrow]

Hehe, always the jokester it seems. But I think he's got a point. If we can look past the fear and panic, Treasuries make about as much sense right now as the yield it's paying.

[Investing First Steps]

It's a manifestation of fear during a banking crisis. If I am a hedge fund manager and I am worried about the viability of the institutions where I keep my client's funds, a T-Bill may seem like a safe place to put my money for 4 weeks to see if my broker is going under.