Why are the bonds held by the Fed and government agencies excluded from the privately held debt figures?
A) The U.S. Treasury does not have to pay off these bonds.
B) These bonds were not issued by the U.S. Treasury.
C) These bonds do not create a net-interest obligation for the federal government.
D) These bonds are not interest-bearing bonds.

Question

Quizplus · Accepted Answer

Bonds held by the Fed and government agencies are excluded from privately held debt figures because they do not create a net-interest obligation for the federal government. This is because the interest earned on these bonds is returned to the Treasury, effectively cancelling out the interest expense on the debt.

Why Are the Bonds Held by the Fed and Government