“Probably no more or less fraudulent than any other treasury bond or dollar bill for that matter.”
The Treasury sells marketable TBills. These TBills are not marketable so they just represent additional government borrowing or money supply creation (more likely money supply creation since there is a limit on the amount of TBills that can be sold). If marketable TBills are not honored, the US government has defaulted. The dollar will plunge at that point. However, I doubt that point will ever occur because the US Treasury can just create dollars. However, external parties will stop buying US debt and devalue the dollar.
“If marketable TBills are not honored, the US government has defaulted. The dollar will plunge at that point. However, I doubt that point will ever occur because the US Treasury can just create dollars. However, external parties will stop buying US debt and devalue the dollar.”
External parties have been buying treasuries because there are not many alternatives.
The USA is still seen as a safe haven of sorts.
Inflation is still low.
Treasuries still represent a good place to park money.
In a race to the bottom, the USA is not in the lead, yet.
Of course this situation cannot continue, and the current trend will get worse, much worse.
Revolution, Repeal of the 16th Amendment and the following Tax Reform will mark reversal of the trend:
http://www.fairtax.org/site/PageServer?pagename=about_faq
T bills certainly are more marketable than G fund T bills, but the G fund is not entirely unmarketable, but it only has one buyer (the treasury).
Participants can trade out of the G fund into a corporate bond fund, and various stock funds and the TSP board immediately redeems the T bills with the treasury to make up for the decrease in funds.
If everyone trades out of the G fund, there are no funds for little Timmy to borrow.