HOME |
RSS | 
The idea might seem laughable now, but 11 years ago, when the US was running a budget surplus, the government did a secret study to find out what would happen if it paid off its entire debt.
The study's conclusion? Paying off the entire US debt could actually harm the global economy!
If the U.S. paid off its debt there would be no more U.S. Treasury bonds in the world. "It was a huge issue ... for not just the U.S. economy, but the global economy," says Diane Lim Rogers, an economist in the Clinton administration.
The U.S. borrows money by selling bonds. So the end of debt would mean the end of Treasury bonds.
But the U.S. has been issuing bonds for so long, and the bonds are seen as so safe, that much of the world has come to depend on them. The U.S. Treasury bond is a pillar of the global economy.
Banks buy hundreds of billions of dollars' worth, because they're a safe place to park money. Mortgage rates are tied to the interest rate on U.S. treasury bonds. The Federal Reserve — our central bank — buys and sells Treasury bonds all the time, in an effort to keep the economy on track.
If Treasury bonds disappeared, would the world unravel?
NPR's All Things Considered has the story: Link
From the Upcoming Queue, submitted by 
