The Federal Government requires substantial capital to keep the country running. Taxes are collected throughout the year to accommodate a portion of these needs. Another funding source comes from issuing Treasury Bills, Notes, and Bonds issued through frequent auctions and having different maturities. These issues act as loans to the Federal Government until they mature. As the securities mature, the Treasury will repay the investor the principal, face value, and the interest earned for loaning the money.
The US Government guarantees the loan's principal, reducing any risk to the investor. This is why money flows to US Treasuries, a safe haven, during times of crisis, whether domestic or international.
