The $13 Trillion Question: Managing the US Government’s Debt

November 10, 2015, 1:30–5:45 p.m. – Chicago

There is a lot of attention paid to the size of the federal debt, which amounts to more than $13 trillion. There is very little attention paid to how the US 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, the Hutchins Center on Fiscal and Monetary Policy at Brookings and the University of Chicago Booth School’s Initiative on Global Markets took a close look at how the US government does its borrowing, the subject of a new Brookings Institution Press book, The $13 Trillion Question: Managing the U.S. Government’s Debt.”

Robin Greenwood and Samuel Hanson, both of the Harvard Business School, argued 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 (perpetuals, in the jargon of the trade.)

This conference was co-sponsored by the Hutchins Center on Fiscal and Monetary Policy at Brookings Institution.

Attendance was by invitation only.

Program

Session I - The Optimal Maturity of Government Debt and Debt Management Conflicts between the U.S. Treasury and the Federal Reserve

Speakers 
Robin Greenwood, George Gund Professor of Finance and Banking, Harvard Business School

Samuel G. Hanson, Assistant Professor of Business Administration, Harvard Business School
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Discussant
Guido Lorenzoni, Breen Family Professor, Northwestern University
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Moderator
Austan Goolsbee, Robert P. Gwinn Professor of Economics, University of Chicago Booth School of Business

Session II - A New Structure for U.S. Federal Debt

Speaker
John H. Cochrane, Senior Fellow, Hoover Institution and Distinguished Senior Fellow, University of Chicago Booth School of Business
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Discussant
James J. McAndrews, Executive Vice President, Federal Reserve Bank of New York
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Moderator
Anil K Kashyap, Edward Eagle Brown Professor of Economics and Finance, University of Chicago Booth School of Business

Session III - Panel Discussion

Panelists
Seth B. Carpenter, Assistant Secretary for Financial Markets, Department of the Treasury

Charles Evans, President and Chief Executive Officer, Federal Reserve Bank of Chicago

Sara Sprung, Managing Director, Neuberger Berman

Moderator
David Wessel, Director, The Hutchins Center on Fiscal and Monetary Policy, Brookings Institution