“Bruce R. Bent, who helped invent money market funds in the 1970s and is chief executive of The Reserve, an investment management company, added, “The most important thing is sleeping well at night.”

I hear that the sleeping accommodations are excellent at the Allentown Federal penitentiary, where I expect Bent will be shortly.

Problem is USA debt is denominated in dollars. Most USA debt dollars are foreign and do their accounting in other currencies…

Also, consider instead of holding USA debt in dollars paying nugatory nominal rates, the alternative of holding german government debt denominated in euros…

No rational USA based investor should be buying USA debt now.

Actually since late 2006/early 2007 when this mess first started I’ve traded my IRAs for nice gains; in this the new short and ultrashort ETFs and funds have been a big help (since an IRA is not a margin acct you cannot sell short in it). I have trouble imagining any circumstance that would make me flee to govt debt as an investment. Of course at times I hold a lot of cash, depending.

Yes but no default risk, which is what the flee-ers are flee-ing from.

Look at it this way if the US govt defaults we be all up the creek with no paddle.

I don’t 100% get the logic of the flee-ers since govt debt has capital risk too — the market price of the bonds can change based on current interest rates.

Why are you not allowed to move your 401K money into cash? I apologise if that is a basic question but I am British and do not know the US system.

I am wondering whether it is a tax regulation – we have similar rules in the UK. If so, it seems to me that this is a disgrace. Governments are shepherding people into more risky assets than they might otherwise choose.

Beware of Investment Tips from Anonymous users on the internet. Having said that, I couldn’t resist replying.

I have a SEP-IRA that consists of 20 years of savings that has been 100% in US Treasury paper since 2006. I would like to say I am prescient but in reality I’m just lucky.

1. If I had a 401-K I would look into funds that invest only in Treasuries. If you believe that the next Fed moves are more likely to be down you may want to look into Funds that invest in 3-10 or 10+ yrs only, otherwise the safest is probably funds that specialize in short maturity paper.

2. If you think there’s more Inflation (as measured by CPI) look into funds that invest in TIPs.

My personal fund allocation is in the following ETFs :
40% TLT, 50% IEF and 10% SHY, although as interest rates keep going down I will probably sell the longer maturities in favor of the shorter paper.

Adam from Pdy

This breaking of the buck occurs after a regulatory relaxation earlier this year allowing them to hold lower grade securities, following the term-auction bond nuclear implosion.

Those who are enraged that AIG will be euthanized instead of being forced to die a rapid and extremely painful death should keep in mind that their preferred alternative would have caused MANY more money market funds to break the buck also, and very quickly.

AIG was one of the BIGGEST players in that market as well.

MATT DUBUQUE