Treasury Yields Speak to the Folly of "Balanced Budgets"

In 1980 total U.S. federal debt was roughly $900 billion. Today it’s $30 billion.

It all brings up a “trick” question of sorts: With total federal debt over thirty times greater than it was roughly 40 years ago, wouldn’t borrowing costs for the U.S. Treasury be much higher to reflect the debt explosion? Wouldn’t they in particular be much higher in consideration of the various “unfunded liabilities” that Treasury’s on the hook for, and that deficit scolds continue to remind us of?

It seems that more than a few would reasonably respond that Treasury’s borrowing costs must be higher to reflect all the debt. Except that they’re not. While Treasury paid 11 percent to borrow in 1980, the yield on a 10-year Treasury note today is roughly 1.5 percent.