RSSAverage Interest Rates on U.S. Treasury Securities (2001 – 2008)
The graph illustrates the Average Interest Rate for marketable and non-marketable securities (United State Treasury Bills, Notes and Bonds) over a two-year period for comparative purposes. The interest rate is weigthed by the amount of unmatured securities outstanding in each category.
One can draw a couple of conclusions from this graph. First, the United States finances much of the national debt with relatively short term debt because the average interest rate paid is highly correlated with short term interest rates. We will illlustrate this more clearly in a following chart which shows the national debt broken down by time to maturity.
For the moment, the use of short term debt is not a bad thing because we pay less in interest during a period of historically low rates. But, if the U. S. continues to prefer a mix weighted toward short term notes, we will pay much more when interest rates rise. In effect, the National Debt is a gigantic Adjustable Rate Mortgage, except the collateral is the good faith of the United States rather than a home or piece of property.
Note: Average Interest Rates are calculated on the total unmatured interest-bearing debt. The average interest rates for total marketable, total non-marketable and total interest-bearing debt do not include the U.S. Treasury Inflation-Protected Securities.
5 Responses to “Average Interest Rates on U.S. Treasury Securities (2001 – 2008)”
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February 20th, 2009 at 10:25 am
[...] have to pay 3% interest on these new loans. This is a generous assumption, considering that the average rate on treasury bills has been much higher. I used both of the above jobs assumptions in my calculations and found that the government will [...]
February 22nd, 2009 at 3:20 am
If the Federal Reserve can loan to privately owned banks money at 0.25 percent to save the economy, I do not see why they cannot loan State and local government money at 0.25 percent to save the economy and government services. Since state and municipal bond’s interest is federal tax free, government revenue will increase as private money will buy more corporate bonds that are taxable or United State Treasury Bills, Notes and Bonds.
“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.” FDR
March 29th, 2009 at 11:05 am
I notice that the average rate on the National Debt is about 3.8% now with rates the lowest in my lifetime. I remember a feasability study by the Corp of Engineers on the Tennessee-Tombigbee Waterway where they used well under 1%. I’ve recently seen that many distressed mortgages are being re-financed at about 3.3% for 40 years.
The only logical conclusion I can draw is this is suicide policies for the US finances.
September 21st, 2009 at 9:24 pm
Charts comparing maturities and buyers would help the layperson understand the gravity of the situation.
September 21st, 2009 at 9:30 pm
Note: Good faith is going out the door and hard assets are the new model… Where national treasure can be plundered; resisting will result in punitive future short term resets. You guys working for the shanghai co-op?