Debt Management in an Era of Quantitative Easing: What Should the Treasury and the Fed Do?
While the Federal Reserve was buying trillions of dollars of long-term U.S. Treasury bonds and taking them out of private investors’ portfolios in its quest to resuscitate the U.S. economy, the debt managers at the U.S. Treasury were moving in the opposite direction by lengthening the average maturity of its bond issuance, putting more long-term Treasury bonds into private investors’ portfolios. With the benefit of hindsight, did this make sense? Does it appropriately reflect the differing objectives of the Treasury’s debt managers and the Fed? Or is it an example of inadequate coordination by fiscal and monetary authorities at a moment of economic peril?
On September 30, the Hutchins Center on Fiscal and Monetary Policy at Brookings presented “Government Debt Management at the Zero Lower Bound,” a new paper by Robin Greenwood and Sam Hanson of Harvard Business School, Josh Rudolph of the Harvard Kennedy School of Government, and Lawrence Summers, the former U.S. Treasury secretary and former director of the National Economic Council. Governor of the Federal Reserve Board Jerome Powell, former Treasury Undersecretary Mary John Miller, Jason Cummins of Brevan Howard, and Lou Crandall of Wrightson ICAP served as panelists to discuss the paper after it is presented.
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George Gund Professor of Finance and Banking - Harvard Business School
Marvin Bower Associate Professor - Harvard Business School
Master of Public Policy - Harvard Kennedy School of Government
Charles W. Eliot University Professor and President Emeritus - Harvard University
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[On the ongoing trade negotiations] If we’re serious about resolving the core issues that the U.S. has with China, then this is going to be a way station that’s going to require a lot more continued focus by the administration for a number of months if not years.