It's not the easiest read you'll come across all day (which is why I've attached a picture of an adorable puppy to trick you into read this post), but Alan Sloan's argument that the government should be "borrowing as much money as it can by selling long-term Treasury securities before the financial world comes to its senses and rates rise, rather than continuing to sell shorter-term securities" makes a lot of sense.Of late, the Feds have preferred to borrow money by selling short-term securities rather than long-term securities. That makes a superficial sort of sense: "Borrowing money for 30 years at today's rates costs the Treasury about 3.6 percent in annual interest, while borrowing it for 30 days costs only 0.2 percent, and for six months, 0.4 percent." Those numbers are absurdly low, and for a reason: The Federal Reserve is slashing interest rates with all the gusto of a serial killer. Borrowing at short-term rates, thus, makes our deficit look smaller because the interest on our debt is lower.The problem is we don't cease needing that money after 30 days. So we roll the debt over. We refinance. And those numbers are going to go up: Assuming eventual economic recovery (and if we can't assume that, we've got bigger problems), the Federal Reserve will ease those rates to more traditional levels. "Thus," writes Sloan, "it's not hard to foresee short rates in the 4 percent range in a few years, five-year Treasurys (currently 1.7 percent) in the 6 percent range, and 30-year Treasuries at 7 percent-plus."The long-term debt, meanwhile, is also absurdly cheap given historical trends. Not as cheap as short-term debt, but cheap. And the virtue of a 30-year rate is that it locks that number in for, well, 30 years. It means the government can take advantage of the low rates for the next three decades rather than just until the month that the financial system rouses itself from the fetal position. LONG ARGUMENT ABOUT WHAT TYPES OF DEBT TO BUY PUPPY!
It's not the easiest read you'll come across all day (which is why I've attached a picture of an adorable puppy to trick you into read this post), but Alan Sloan's argument that the government should be "borrowing as much money as it can by selling long-term Treasury securities before the financial world comes to its senses and rates rise, rather than continuing to sell shorter-term securities" makes a lot of sense.Of late, the Feds have preferred to borrow money by selling short-term securities rather than long-term securities. That makes a superficial sort of sense: "Borrowing money for 30 years at today's rates costs the Treasury about 3.6 percent in annual interest, while borrowing it for 30 days costs only 0.2 percent, and for six months, 0.4 percent." Those numbers are absurdly low, and for a reason: The Federal Reserve is slashing interest rates with all the gusto of a serial killer. Borrowing at short-term rates, thus, makes our deficit look smaller because the interest on our debt is lower.The problem is we don't cease needing that money after 30 days. So we roll the debt over. We refinance. And those numbers are going to go up: Assuming eventual economic recovery (and if we can't assume that, we've got bigger problems), the Federal Reserve will ease those rates to more traditional levels. "Thus," writes Sloan, "it's not hard to foresee short rates in the 4 percent range in a few years, five-year Treasurys (currently 1.7 percent) in the 6 percent range, and 30-year Treasuries at 7 percent-plus."The long-term debt, meanwhile, is also absurdly cheap given historical trends. Not as cheap as short-term debt, but cheap. And the virtue of a 30-year rate is that it locks that number in for, well, 30 years. It means the government can take advantage of the low rates for the next three decades rather than just until the month that the financial system rouses itself from the fetal position. 
