America’s Looming Debt Decision
The US government should not operate like a bank or a hedge fund, loading up on short-term debt to fund long-term projects. With net US government debt already running at 82% of national income, the fiscal costs of a fast upward shift in interest rates could be massive.
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BOGOTÁ – Should the US government lock in today’s ultra-low borrowing costs by issuing longer-term debt? It’s a tough call, but with overall debt levels already high (not to mention unfunded pension and medical insurance liabilities, which are both likely to rise), perhaps the time has come.