Jump to ContentJump to Main Navigation
The Economists' Voice 2.0The Financial Crisis, Health Care Reform, and More$
Users without a subscription are not able to see the full content.

Joseph Stiglitz and Aaron Edlin

Print publication date: 2014

Print ISBN-13: 9780231160155

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231160155.001.0001

Show Summary Details
Page of

PRINTED FROM COLUMBIA SCHOLARSHIP ONLINE (www.columbia.universitypressscholarship.com). (c) Copyright University of Minnesota Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CUPSO for personal use.date: 19 September 2021

Dr. StrangeLoan

Dr. StrangeLoan

Or, How I Learned to Stop Worrying and Love the Financial Collapse

Chapter:
(p.142) Chapter 18 Dr. StrangeLoan
Source:
The Economists' Voice 2.0
Author(s):

Aaron S. Edlin

Publisher:
Columbia University Press
DOI:10.7312/columbia/9780231160155.003.0018

This chapter describes how the U.S. government came close but missed its chance to solve the problems of debt and taxes. For years, government debt has soared. The Treasury borrowed more and more funds and the government paid obscene sums in interest to service the debt. All that almost came to an end on Wednesday, September 17, 2008, when the interest rate on ninety-day Treasuries fell to three basis points. That is 75 cents of interest on $10,000 of borrowing. Government borrowing was essentially free. And the interest rate, falling fast, seemed sure to go negative. Negative interest on Treasuries would mean no more costs from servicing the debt. People would be paying the Treasury for the privilege of using their money. The Bush administration, however, came up with a plan to bail out the private financial system, destroying the Treasury’s competitive advantage by shoring up the Treasury’s competitive rivals in borrowing. Not only does the government now bear the costs of other borrowers failing to repay, but it must now again pay significant sums for its own borrowing.

Keywords:   government debt, Treasury rates, negative interest, fiscal policy, borrowing, financial regulation, bailout, private financial system

Columbia Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us .