A Global Bond: Explaining the Safe-Haven Status of US Treasury Securities

A Global Bond: Explaining the Safe-Haven Status of US Treasury Securities
Hager, Sandy Brian. (2016). European Journal of Inernational Relations. Online First. 25 July. pp. 1-24. (Article - Journal; English).

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Alternative Locations

https://www.academia.edu/26043512/A_Global_Bond_Explaining_the_Safe_Haven_Status_of_U.S._Treasury_Securities, http://www.capitalaspower.com/2016/07/sandy-brian-hager-a-global-bond-explaining-the-safe-haven-status-of-u-s-treasury-securities/

Abstract or Brief Description

This article offers new theoretical and empirical insights to explain the resilience of US Treasury securities as the world’s premier safe or “risk-free” asset. The standard explanation of resilience emphasizes the relative safety of US Treasuries due to a shortage of safe assets in the global political economy. The analysis here goes beyond the standard explanation to highlight the importance of domestic politics in reinforcing the safe status of US Treasury securities. In particular, the research shows how a formidable “bond” of interests unites domestic and foreign owners of the public debt and works to sustain US power in global finance. Foreigners, who now own roughly half of the US public debt, have something to gain from their domestic counterparts. The top 1% of US households, which dominate domestic ownership of US Treasuries, has considerable political clout, thus alleviating foreign concerns about the creditworthiness of the US federal government. Domestic owners, in turn, benefit from the seemingly insatiable foreign appetite for US Treasury securities. In supplying the US federal government and US households with cheap credit, foreign investors in US Treasuries help to deflect challenges to the top 1% within the wealth and income hierarchy.

Language

English

Publication Type

Article - Journal

Additional Information

Online First

Keywords

capital flows global finance global financial crisis inequality power public debt

Subject

BN International & Global
BN Money & Finance
BN Power
BN Region - North America
BN State & Government
BN Capital & Accumulation
BN Class

Depositing User

Jonathan Nitzan

Date Deposited

28 Jul 2016 20:49

Last Modified

04 Aug 2016 11:21

URL:

https://bnarchives.net/id/eprint/483

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