Inflation Neutral Bonds: The Pluses And Minuses
Dean Foust's "These bonds could blow up in Uncle Sam's face" (News: Analysis & Commentary, June 3), on the Treasury's proposed inflation-protection securities, errs in raising the specter of a large liability for the government in the event that inflation increases. If that happens, the government's revenues rise as well. This gives the Treasury resources to pay higher interest costs. Indeed, the Treasury's costs are already exposed to inflation, since more than one-third of the country's debt rolls over every year.
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