Exam 1 FINC 4410 Hart
Bond market market value >
Market Cap of Stocks
National Debt is accumulation of all the deficits.
2 categories: Intragovernmental holdings (social securities and gov
investing in treasuries) and Held By Public (T-bills, notes, bonds, TIPS,
FRN)
Treasury Department
Cash management of the federal government
-Bring in taxes (IRS)
-Issue treasury securities (T-bills, notes, bonds, Treasury
Inflation-Protected Securities, Floating Rate Notes)
Janet Yellen
Current U.S. Secretary of Treasury
Debt is Related to Income
For a country: Debt divided by GDP
-U.S. is 3rd worst ratio (129%)
-Japan has worst ratio; most of their debt is within the country
U.S. dollar is the reserve currency of the world
May not always be reserve currency.
-Is a bad idea to default on the debt.
- Foreign central banks hold more U.S. dollars than any other country
, Lots of other countries own U.S. treasury securities
Of foreign entities, Japan holds the most treasury securities (1.1 trillion),
followed by China, then the UK
Owns the most amount of the U.S. debt
U.S. Citizens
Having a strong currency means you can buy more things
Helps curb inflation
-sidenote: country w/ strongest Navy has always had the reserve currency
Monetizing the debt. (Printing more money and paying national debt off)
-Inflation would be huge
-Too much money chasing too few goods and services.
-Paying more for the same good/service.
-Governments make makeshift jobs all the time. (Jobs that don't create
value)
- Wages never keep up w/ inflation; inflation means lower standard of living
Real GDP + Inflation = Nominal GDP
-Real GDP 2 to 3% (more goods/services each year) (negative means
recession)
-inflation 2 to 3.5%
-nominal GDP 4 to 6.5%
(Historically speaking)*****
Fiscal Government Policy
*Tax and Spend*
-Congress and president
-2 branches determine this (executive and legislative)
Bond market market value >
Market Cap of Stocks
National Debt is accumulation of all the deficits.
2 categories: Intragovernmental holdings (social securities and gov
investing in treasuries) and Held By Public (T-bills, notes, bonds, TIPS,
FRN)
Treasury Department
Cash management of the federal government
-Bring in taxes (IRS)
-Issue treasury securities (T-bills, notes, bonds, Treasury
Inflation-Protected Securities, Floating Rate Notes)
Janet Yellen
Current U.S. Secretary of Treasury
Debt is Related to Income
For a country: Debt divided by GDP
-U.S. is 3rd worst ratio (129%)
-Japan has worst ratio; most of their debt is within the country
U.S. dollar is the reserve currency of the world
May not always be reserve currency.
-Is a bad idea to default on the debt.
- Foreign central banks hold more U.S. dollars than any other country
, Lots of other countries own U.S. treasury securities
Of foreign entities, Japan holds the most treasury securities (1.1 trillion),
followed by China, then the UK
Owns the most amount of the U.S. debt
U.S. Citizens
Having a strong currency means you can buy more things
Helps curb inflation
-sidenote: country w/ strongest Navy has always had the reserve currency
Monetizing the debt. (Printing more money and paying national debt off)
-Inflation would be huge
-Too much money chasing too few goods and services.
-Paying more for the same good/service.
-Governments make makeshift jobs all the time. (Jobs that don't create
value)
- Wages never keep up w/ inflation; inflation means lower standard of living
Real GDP + Inflation = Nominal GDP
-Real GDP 2 to 3% (more goods/services each year) (negative means
recession)
-inflation 2 to 3.5%
-nominal GDP 4 to 6.5%
(Historically speaking)*****
Fiscal Government Policy
*Tax and Spend*
-Congress and president
-2 branches determine this (executive and legislative)
