Economics
The Real Cost of U.S. Debt Is Nearer the Floor Than the Ceiling
- It’s cheap to service big debt after decades of falling rates
- Central banks loom over bond markets, helping keep it that way
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U.S. politicians are locked in a huge fight over something that more and more people in the financial world view as irrelevant.
Brinkmanship in Washington over whether to raise the debt ceiling or risk a default has become a 21st-century staple. But since the last major standoffs a decade or so ago, there’s been a sea change in the way investors, economists and officials think about public borrowing.
They’ve become less interested in the debt’s size, and more focused on what it costs. Nowadays, that isn’t much -- and the Federal Reserve is helping make sure it stays that way, effectively keeping the $22 trillion Treasury market on a short leash.