What Everybody Got Wrong About the Debt Crisis
00:00 Britain went first. A decade ago, long-conventional gilts were nearly 30% of the issuance program. This year's plan has them under 10%. The Debt Office even said it on the record, "Market feedback noted continued declining demand for long-dated conventional gilts, in particular from the domestic
00:16 pension fund sector, which is the polite way of saying we asked around and nobody wants them." Japan cut its issuance of super long government bonds for the coming year to about 17 trillion yen, the lowest in 17 years. With the Japanese Ministry of Finance now considering reducing issuance even
00:33 further in the coming months, America's making the move to the short end as well. Short-term Treasury bills now run around 22% of the debt, above the 15 to 20% range the Treasury's own advisory committee recommends. Across the OECD, Treasury bills now out issue fixed-rate bonds entirely. The ratio of 30-year
00:51 plus debt sold against 1 to 5-year debt is now the lowest since 2008. The OECD's phrase for all of this is that it's cost efficient ex ante, which is Latin for beforehand. So, what they're saying is it's cheaper for now, because shortening doesn't reduce what you owe. It just changes how often you have to ask.
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