No. of Recommendations: 2
then I noticed the part where you flippantly propose defaulting on US debt, and I realize that logic and reason have no place in this discussion."

If one assumes that the Fiscal Cliff is somehow miraculously averted, it is reasonable to assume that the grand bargain will include kicking the can further down the road.

In such an instance (which would of necessity require more US sovereign debt issuance and implicitly involve more QE on the part of the Fed), does it not make sense to extend the US debt maturity while rates are still virtually nil?

I have proposed before that the US issue 100-year or even 200, 300, 400 or 500-year debt. In the present market, there are bound to be takers - if no one else, the primary dealer banks would buy them and flip them to the Fed for a quick-and-tidy profit on the markup which Bernanke consistently pays to keep bond prices high.

Does anyone know whether Britain ever went through with its 100-year bond issuance?

The following announcement came out in March, 2012:

U.K. May Revive Long Gilt First Used in South Sea Bubble
By Robert Hutton & Keith Jenkins - Mar 14, 2012 8:08 AM ET

Britain is proposing to revive “perpetual gilts,” first used in the wake of the 1720 South Sea Bubble crisis, to allow the government to borrow for as long as possible at record-low rates, according to two people familiar with budget discussions...introducing government bonds of up to 100 years and reviving debt with no fixed maturity, a sort of bond first issued in the 19th century to put off repaying debt resulting from the South Sea Bubble...

“A 100-year bond is effectively a perpetual,” John Wraith, a fixed-income strategist at Bank of America Merrill Lynch in London, said in a telephone interview today. “From a borrower’s standpoint, it’s a very attractive product. There’s good reason to lock in low funding costs with yields at these levels...”

When it comes to borrowing funds, it just make sense to borrow for as long a term as possible while interest rates are near zero.

With QE infinity having been announced and accepted by the markets, it seems that the politicians are overlooking the obvious solution to a revenue/expense mismatch that can be overcome with borrowed funds.

If the Fed is volunteering to be the bag holder, why in the world would the politicritters not take them up on the offer?

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