I remember being told the U.S. insignia on our OD green wool blankets signifies the soldier has died. Is this an old rumor or a tradition?

This illustration makes it very clear, that is the only way the blanket should ever be displayed on the bed. The only blanket that the US shouldn't appear on is a dust cover being used with the second blanket over the pillow area. On any bunk the US should be viewed properly by anyone standing at the foot of the bed. This blanket must have the US displayed that way on a formal white collar bed or with the dust cover bed as well. There are no exceptions. First Sgt Scott thanks for the proper diagram from another former 1st Sergeant.