You may have read reports about an impending “debt crisis” in the U.S. Should you be worried about investing in Treasury securities?
Part of the concern over debt has been driven by the cost of government borrowing, which has risen because of higher interest rates. But it’s worth noting that while interest expenses have risen to nearly 2% of gross domestic product (GDP), this measure had exceeded 3% in the early 1990s. So, while the upward trend of federal debt could prove problematic down the road, the claims of a current crisis may be overblown. And Treasury securities are still considered among the safest investments in the world, as they are secured by the full faith and credit — that is, the ability to borrow and tax — of the United States.
In any case, if you haven’t invested in Treasury securities, you’ll want to know the basics. First of all, when you purchase a Treasury security, you’re lending money to the federal government for a specific period of time.
