United States Treasury security

From The TSP Survival Wiki
(Redirected from Treasury bill)
Jump to: navigation, search
This page is in the process of being scrutinized.
Please help us by being very critical of the contents and changing the article to make it better.

A United States Treasury security is a government debt issued by the United States Department of the Treasury through the Bureau of the Public Debt. Treasury securities are the debt financing instruments of the United States federal government, and they are often referred to simply as Treasuries.

There are four types of marketable treasury securities: Treasury bills, Treasury notes, Treasury bonds, and Treasury Inflation Protected Securities (TIPS).

Contents

Directly issued by the United States government

Treasury bill

"Treasury bill" redirects here.

Treasury bills (or T-bills) Mature in one year or less and do not pay interest prior to maturity[1] Many regard Treasury bills as one of the least risky investments available to U.S. investors unless of course there were a total economic collapse with a bankruptcy of the US Government. Better to invest in tangibles.

Treasury note

This is the modern usage of "Treasury Note" in the U.S.

Treasury notes (or T-notes) mature in two to ten years.

The 10-year Treasury note has become the security most frequently quoted when discussing the performance of the U.S. government bond market and is used to convey the market's take on longer-term macroeconomic expectations.

Treasury bond

"U.S. Bonds" redirects here.

Treasury bonds (T-Bonds, or the long bond) have the longest maturity, from twenty years to thirty years. Since the 1970s the 10 Year Treasury Note and the 30 year fixed mortgage have had a very tight correlation.[2]

TIPS

Treasury Inflation-Protected Securities (or TIPS) are the inflation-indexed bonds issued by the U.S. Treasury. The principal is adjusted to the Consumer Price Index (CPI), the commonly used measure of inflation. When the CPI rises, the principal adjusts upward. If the index falls, the principal adjusts downwards.[3][4] TIPS are currently offered in 5-year, 10-year and 30-year maturities.[5]


U.S. savings bonds

Savings bonds were created to finance World War I, and were originally called Liberty Bonds. Unlike Treasury Bonds, they are not marketable. In 2002, the Treasury Department started changing the savings bond program by lowering interest rates and closing its marketing offices. As of January 1, 2012, financial institutions no longer sell paper savings bonds.[6]


Domestic Holdings of US Debt

During the Obama Administration, for the quantitative easing monetary policy, the Federal Reserve holdings of U.S. Treasuries increased from $750 billion in 2007 to over $1.7 trillion as of end-March 2013.[7] On September 13, 2012, in an 11-to-1 vote, the Federal Reserve announced they were also buying $45 billion in long-term Treasuries each month on top of the $40 billion a month in mortgage-backed securities. The program is called QE3 because it is the Fed's third try at quantitative easing.[8] The result is that an enormous proportion of the US debt is actually owed from the Treasury to the Federal Reserve.

International Holding of US Debt

It is potentially disturbing to the U.S. national security that China owns the majority of the national debt. As of January 2014,[9] the foreign holders of at least $40 billion of U.S. Treasury Securities are:

Holders $US billion Ratio to GDP[10][11] Percent change since Jan 2013
Mainland China 1,273.5 10% +4.9%
Japan 1,201.4 24% +8.8%
Belgium 310.3 61% +67.2%
Caribbean banking centers1 293.3 n/a +6.8%
Oil exporters2 246.4 n/a −5.8%
Brazil 246.0 11% - 3.2%
Taiwan 179.1 37% −7.1%
Switzerland 173.7 27% −8.6%
United Kingdom3 162.9 7% +16.9%
Hong Kong 160.3 57% +12.2%
Luxembourg 135.3 223% −8.3%
Russia 131.8 6% −19.8%
Ireland 108.8 49% +0.3%
Norway 88.2 17% +15.3%
Singapore 85.9 30% −17.2%
India 68.1 4% +16.4%
Mexico 67.2 5% +7.3%
Germany 63.9 2% +5.6%
France 57.5 2% +10.2%
Korea 55.6 5% +15.6%
Canada 55.3 3% −10.4%
Turkey 48.9 6% −15.3%
Thailand 47.8 12% −22.4%

1Bahamas, Bermuda, Cayman Islands, former Netherlands Antilles, British Virgin Islands and Panama

2Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria

3includes Channel Islands and Isle of Man

Quotes

"The one aim of these financiers is world control by the creation of inextinguishable debt." - Henry Ford


See Also

References

  1. Treasury Bills, TreasuryDirect.gov. U.S. Department of Treasury, Bureau of Public Debt. April 22, 2011. Accessed April 7, 2014.
  2. Average 30 Year Mortgage Rates Remain Under 4% Headed into May 2012, RWB Press, April 30, 2012, http://www.rwbpress.com/2012/04/29/average-30-year-mortgage-rates-remain-under-4-headed-into-may-2012/#mortgageinterestrates
  3. Benjamin Shephard, Park Your Cash, http://www.investingdaily.com/pf/15730/park-your-cash.html, InvestingDaily.com, July 9, 2008, Accessed April 7, 2014
  4. http://www.treasurydirect.gov/indiv/research/articles/res_invest_articles_tips_0704.htm
  5. http://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm, TreasuryDirect.gov, Treasury Inflation-Protected Securities(TIPS), 7 April 2011, Accessed April 7, 2014
  6. Pender, Kathleen, Treasury takes new whack at savings bonds, http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/04/BU0ATNHMO.DTL, December 3, 2007, The San Francisco Chronicle, April 7, 2014
  7. Federal Reserve Statistics Release
  8. [1]
  9. http://www.treas.gov/tic/mfh.txt, Major Foreign Holders of Treasury Securities, 17 March 2014, treasury.gov
  10. CIA World Factbook – Field Listing :: GDP (official exchange rate)
  11. The World Factbook – Field Listing :: GDP (purchasing power parity) for China figures only
Personal tools
Namespaces

Variants
Actions
Navigation
Toolbox