Treasury Secretary

  

Categories: Careers

The head honcho. The cash cattleman. The policy player. The Treasury Secretary.

In the U.S., the Treasury Secretary is the head of the U.S. Department of the Treasury (so no, not "just" a secretary). The Treasury Secretary is a Prez cabinet member, and fifth in line for the U.S. presidency.

The Treasury is where monetary policy and fiscal policy meet...where the money is put into the U.S. bank account from tax revenue (thanks for collecting, IRS), and where the money is taken out to buy things. It’s a really, really big bank account. The actual job of the Treasury Secretary though is mostly fiscal; monetary policy is mainly the responsibility of the Federal Reserve (the U.S. central bank).

In addition to handling all that cash-money and occasionally brushing shoulders with the independent Fed, the Treasury Secretary acts as a presidential advisor on everything money: domestic and international squabbles, tax policy...you name it. It governs Treasury securities as well.

For those who haven’t seen Hamilton (yet), Alexander Hamilton was the first Treasury Secretary. Spoiler alert.

Related or Semi-related Video

Finance: What are T-Notes, T-Bonds and T...16 Views

00:00

Finance allah shmoop what are t notes t bills and

00:06

tips All right we'll see that tea in there Well

00:09

it stands for treasury and all of these air one

00:12

flavor or another of government debt that is the u

00:16

s government raises cash for itself teo fix roads build

00:19

bridges and erect statues of lebron james dunking on the

00:23

statue of liberty or you know whatever else he thinks

00:26

the public wants or needs it does that by auctioning

00:29

off these debt securities with the promise of its full

00:31

faith and credit to pay back the money is the

00:34

paper specifies well t notes are quote mid range unquote

00:37

paper in that they generally have maturity ease of two

00:40

three five seven and ten years that's a teen note

00:43

t notes carry a stated interest rate and look a

00:45

lot like a normal corporate bond paying interest twice a

00:48

year T bills on the other hand are generally very

00:52

short term paper usually coming due within a few days

00:55

all the way up to a year they're sold or

00:57

auctioned at a discount meaning that the t bill might

01:00

promise to pay a thousand bucks if it comes due

01:03

In six weeks you might pay nine hundred ninety six

01:06

dollars for it and you get a whopping fee Four

01:08

bucks an interest for your six weeks hard work of

01:11

owning that t bill and just you know sitting there

01:14

kind of looks like a zero coupon bond Okay so

01:16

now we have tips that's tips treasury inflation protected securities

01:21

tips as in show us your tips getting Why do

01:24

we have such a thing Well the problem with super

01:27

duper safe bonds like those of the u s government

01:30

is that investors holding them a long time often do

01:33

worse after taxes than inflation meaning that if inflation is

01:37

growing at three percent a year in their bonds are

01:40

only returning one percent a year after tax while then

01:43

the investors actually losing two percent a year in buying

01:46

power and that's a problem in nineteen nineties when investors

01:49

started to realize this issue well they began Tio you

01:52

know stop buying u s government bonds and that's a

01:55

huge problem for a country that desperately needs to borrow

01:58

cash all the time So rather than risk a liquid

02:01

marketplace where there's just no buyers buying government paper uncle

02:05

Sam created tips which basically adjust the end value of

02:09

the principle that investors get based on the c p

02:13

i or consumer price index which is a measure of

02:16

the average selling prices of a carton of milk a

02:19

gallon of fuel a dozen eggs and a grand slam

02:21

breakfast at denny's Basically what happens is that the price

02:24

of the principal the investor gets back goes up with

02:27

inflation over time So they're not losing buying power and

02:31

that's a big deal That's it go Enjoy your grand 00:02:33.995 --> [endTime] slam It'll be fourteen thousand dollars in fifty years

Up Next

Finance: What are Government Bonds?
52 Views

What are government bonds? Uncle Sam needs dough. He sells bonds in the form of T-Bills, T-Notes, Treasury paper of all flavors. His credo? The cre...

Find other enlightening terms in Shmoop Finance Genius Bar(f)