Ten Year Real Yield Curve Hits Zero

[David Morris]

Hoe Things Really Are:

http://thinkprogress.org/yglesias/2011/09/04/311696/ten-year-real-yield-curve-hits-zero/

Ten Year Real Yield Curve Hits Zero

"I’ve been talking a fair amount about the negative real interest
rates on five-year and seven-year treasury bonds. I see that as of
Friday, then ten-year bond has declined to a real yield of zero.

I don’t expect these facts to persuade people who view almost all
government spending as consisting of low-return boondoggles to
suddenly start loving it. But the fact remains that when it’s cheaper
to pay for things by borrowing money than by taxing productive
activity, it’s pretty foolish not to step up your borrowing. The issue
we ought to be debating is whether we should increase borrowing by
cutting taxes or increase borrowing by hiking spending. With the House
controlled by Republicans and the White House controlled by Democrats,
we’d end up compromising on a mix of the two. Instead we’re talking
deficit reduction. Why?"