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How does the U.S. government manage $13 trillion in debt?

Many people in and out of Washington talk about the size of the federal debt, and for good reasons. Now at more than $13 trillion, it’s larger measured against the size of the economy than at any time since the end of World War II.  Far fewer people focus on how the U.S. Treasury borrows all that money – how much short-term versus long-term, how much at fixed rates and how much at rates that vary with inflation. 

To remedy that, the Hutchins Center on Fiscal and Monetary Policy at Brookings is taking a close look at how the U.S. government does its borrowing—and how it might do it better— in a new book, “The $13 Trillion Question: How America Manages Its Debt” and at an event in Chicago on Nov. 10 from 1:30 p.m. to 5:45 p.m. Central Time. You can watch the event and discussion via webcast here.

In the book, Harvard’s Robin Greenwood, Sam Hanson, Larry Summers and Josh Rudolph argue that taxpayers would be better off if the U.S. Treasury borrowed more at short-term maturities and less at long-term maturities. They also question the wisdom of the Treasury borrowing more and more at long-term maturities (putting more long-term debt in investors’ hands) while the Federal Reserve was buying trillions of long-term bonds in the market (taking long-term bonds out of investors’ hands) in an attempt to bolster the economy through “quantitative easing.”  And John Cochrane of the University of Chicago’s Booth School of Business and Stanford’s Hoover Institution imagines new and novel ways for the U.S. to borrow.   Several prominent economists comment on those arguments, and Mr. Summers, the former U.S. Treasury secretary, offers some concluding observations.  “Debt management,” he writes, “is too important to leave to the debt managers.”

On Tuesday, Nov 10, at 1:30 p.m. Central (2:30 ET) , at a conference co-sponsored by the Initiative on Global Markets at the University of Chicago Booth School of Business, authors Greenwood, Hanson and Cochrane will elaborate on their arguments.  Commenting will be Charles Evans, president of the Federal Reserve Bank of Chicago; Seth Carpenter, Assistant Treasury Secretary for Financial Markets;  James McAndrews, executive vice president of the Federal Reserve Bank of New York; Guido Lorenzoni, professor of economics Northwestern University, and Sara Sprung, managing director, Neuberger Berman.  

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