Tuesday, November 26, 2024

Should the US Treasury stop paying interest on the National Debt?

It would save $1 trillion per year.  Just cut the interest rate to 0% and only issue short-term bonds.  Why should rich people have guaranteed income for no risk?  If they want a bigger return, they can buy stocks.

Read:  https://stephaniekelton.substack.com/p/how-to-cut-2-trillion-in-federal

Now imagine what would happen if, instead of the president jawboning the Fed, the 119th Congress decided to exercise greater control over this part of the federal budget. To do that, it could instruct the Federal Reserve to permanently bring the overnight interest rate down to ~zero percent and to rely on other tools to influence the broader economy. To ensure that interest expense falls toward zero over time, Congress could instruct the U.S. Treasury to stop issuing anything with duration beyond a 3-mo T-bill. Voilà! It wouldn’t just save $2 trillion, it would save tens of trillions of dollars over time.


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