A budget deficit occurs when expenditures exceed income, and it can affect governments, corporations, and individuals. It necessitates funding solutions like issuing treasury bonds or reducing expenses.
Government securities are debt instruments issued by a government to support government spending and obligations. These securities include Treasury bills, bonds, notes, and savings bonds, all of which are considered highly creditworthy due to the backing of the government's 'full faith and credit.'
An inverted yield curve is an unusual financial phenomenon where short-term interest rates exceed long-term rates, often seen as a precursor to economic recessions.
National debt refers to the total amount of money that the federal government owes to creditors due to borrowing. It consists of various debt instruments such as Treasury bills, Treasury notes, and Treasury bonds. The interest on the national debt is a significant part of the federal government's annual expenses.
Purchasing power risk refers to the risk that inflation will erode the value of the currency in which an investment or deal has been made, effectively reducing the real return on investment over time.
Quantitative Easing 2, often abbreviated as QE2, was a controversial monetary policy program implemented by the U.S. Federal Reserve in 2010 to purchase $600 billion in U.S. Treasury bonds. The program aimed to reduce interest rates and stimulate economic growth but raised concerns about potential inflation.
A Treasury Bond (T-Bond) is a long-term debt instrument issued by the U.S. government, as well as a term for bonds bought back by corporations.
Treasury Inflation-Protected Securities (TIPS) are a type of inflation-indexed treasury bonds that adjust their principal value based on the Consumer Price Index (CPI). TIPS offer protection against inflation while providing a lower interest rate.
Direct government obligations, comprising debt issues of the U.S. government, including Treasury bills, notes, bonds, and Series EE, Series HH, and Series I savings bonds, as distinct from government-sponsored agency issues.
