Barron’s financial weekly urged President-elect Donald Trump to consider issuing US government bonds that don’t mature for 100 years.
Editor Randall Forsyth made the case for this new debt vehicle in the paper’s Saturday edition to address both “America’s heavy debt burden and its need for faster economic growth.”
Forsyth wrote that because of entitlements the debt would be likely to climb to $45 trillion in 20 years before any of Trump’s own spending and tax cuts are factored in.
“Given the incoming administration’s ambitious plans, and the nation’s already high debt, the president-elect might ask: What would Hamilton do?” the Barron’s editor wrote.
He argued that America’s most famous treasury secretary would take advantage of the current, almost historically low interest rates, by issuing a new kind of Treasury bonds “now – and for the longest term possible.”
The longest Treasury bonds currently mature in 30 years. Forsyth argued that that term ought to be lengthened to 100 years.
He noted that countries including Belgium, Mexico and Ireland have taken advantage this to finance their national debts at almost historically low rates.
The financial weekly painted a dire picture of what might happen if America does not get hold of the debt in this way.
“The annual interest on a $45 trillion debt load would be about $750 billion at today’s superlow interest rates. If rates rise to a more typical level, the interest on a $45 trillion debt would be about $1.5 trillion a year,” Forsyth warned.
