6 Comments
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Chandan Aralikatti's avatar

I’m hoping it’s a 10d chess move where we somehow move to the digital dollar within the next year.

Chandan Aralikatti's avatar

I figure that if we money launder fast enough then we can speedrun world peace ✌️

Ben Lux's avatar

If 50% of US debt is in bills, why couldn’t the new administration refinance a bunch of that debt into lower interest, longer-term notes or bonds?

Sumit's avatar

Good question. Right now, Treasury bills (which mature in less than a year) make up about 22% of U.S. debt. Treasury notes (2–10 year maturities) make up around 51%.

Each part of the bond market has its own supply and demand dynamics. Bills are basically cash-like instruments—they don’t have interest rate risk and their prices barely move. That’s a big reason there’s always strong demand for them.

You can’t simply shift a huge chunk of short-term debt into long-term bonds (like 20 or 30 year maturities). Those carry a lot of interest rate risk, and the pool of buyers is different (mostly pension funds and insurance companies).

If the Treasury tried to flood the market with long-term bonds, demand might not keep up, which would actually push long-term rates even higher.

We’re already seeing some of that. Despite rising recession fears, 30-year bond yields haven’t dropped much, suggesting limited demand at those durations.

Now, at the margins, the Treasury can and does tweak the debt mix…maybe shifting a little from bills to notes, or notes to bonds.

But it’s a balancing act, not something you can radically change overnight.

Ben Lux's avatar

Has the share of US debt varied at all across different maturities over the last 25 years?