The U.S. said show me the money, and the world did.
Federal debt—incurred when the government sells Treasury bonds, bills, notes and other securities to help cover its costs—recently hit an all-time high, thanks in part to foreign investors who are happy to park their cash in the U.S.
The securities are attractive because of their safety and stability. The government has never failed to pay back its lenders the full value of the securities when they mature after a fixed period: 20 or 30 years for Treasury bonds; two to 10 years for notes; and as long as 52 weeks for bills.
The transactions provide the government with infusions of cash and—as long as the dollar remains the global reserve currency—offer individuals and institutions a safe way to sock away their wealth.
“One thing economists and people in general have miscalculated is the massive global appetite for the U.S. dollar and U.S. dollar-denominated debt,” said David Andolfatto, a senior vice president of the Federal Reserve Bank of St. Louis. “This demand has exploded in the last 30 years.”
