The interest rate on a thirty-year Treasury—a thirty-year loan to the US government—is 1.6 percent as of this writing. Shorter-term yields are far lower. Interest rates on savings accounts and certificates of deposit are so low that, for long-term holdings of US dollars, a mattress or an old coffee can might, for many people, constitute a satisfactory substitute for banking products.

Many individuals depend upon fixed-income securities as a means of nominally protecting the principal of their savings and wealth while also generating an income. This is particularly true of retirees or those nearing retirement. This is because fixed-income securities are generally viewed as among the safest income-producing assets, since the counterparty (the borrower) is contractually obligated to make the payments. This perception of safety and security is especially true for government-issued debts—bonds—from governments that are considered a good credit risk and whose currencies are widely accepted—such as the United States.



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