Summary

Many people focus on the size of the federal debt, which amounts to more than $13 trillion. However, fewer focus on how the U.S. Treasury borrows all that money—how much short-term, how-much long-term, how much at fixed rates, how much at rates that vary with inflation.  

On November 10, 2015, the Brookings Institution’s Hutchins Center on Fiscal and Monetary Policy and the University of Chicago Booth School of Business's Initiative on Global Markets took a close look at how the U.S. government does its borrowing, which is the subject of the Brookings Institution Press book, The $13 Trillion Question: Managing the U.S. Government’s Debt.  

Robin Greenwood of Harvard Business School argued that that Treasury should rely more on short-term and less on long-term borrowing than it has traditionally and that, particularly when the Federal Reserve pushes interest rates to zero, the Treasury and Fed should do more coordinating than they generally do. And John Cochrane of Stanford and University of Chicago made the case for a radical change in the debt instruments the Treasury issues, suggesting that the Treasury rely heavily on debts with no fixed-maturity (or perpetuals).

This conference was co-sponsored by the Initiative on Global Markets at Chicago Booth and the Hutchins Center on Fiscal and Monetary Policy at Brookings Institution.