Paying Off the Debt Would Be a Big Problem - The American Spectator | USA News and Politics
Paying Off the Debt Would Be a Big Problem

The folks at Planet Money have dug up a remarkable document: a 2000 Clinton administration document examining the risks that would be created by paying off the federal debt. As hard as it is to imagine now, that was a real prospect at the time. 

Although the report never saw the light of day (Planet Money obtained it through a Freedom of Information Act request), it outlined the possible harmful consequences of retiring the debt completely. The problem is that if the debt were paid off, there would be no more U.S. Treasury bonds left in circulation. Treasury securities are crucially important to the world financial system in a number of ways: banks buy them as low-risk assets, the Fed uses them for executing monetary policy, and mortgage interest rates vary based on Treasury rates. 

In retrospect, that was a good problem to have. 

Sign Up to receive Our Latest Updates! Register

Notice to Readers: The American Spectator and Spectator World are marks used by independent publishing companies that are not affiliated in any way. If you are looking for The Spectator World please click on the following link:

Be a Free Market Loving Patriot. Subscribe Today!