An Ultra-Long Fix for America’s Highways, Bridges and Grid
Treasury bonds of 50 and 100 years can make U.S. infrastructure the envy of world again.
Bloomberg, August 29, 2019.
I have been discussing infrastructure. for many years, but there are now serious discussions as to how to fund a big new build out: Ultra-long bonds.
It makes rational sense to match up the duration of liabilities with the assets they are funding. Yes, user fees like the gasoline tax are appropriate for maintenance, but this discussion is about new capital construction projects.
The only downside is that current push for this is pro-cyclical, rather than counter-cyclical. Meaning, the optimal time and impact of these projects was during the Great Recession. A $5-10 trillion dollar decade long spend would have helped the U.S. recover from the financial crisis that much sooner.
Regardless, if the United States wants to stay competitive with the fastest growing economies in Europe and Asia, we better match what they are doing in terms of creating the best platform for entrepreneurs and innovators to build out the new companies that will be the next generation of hiring.
We are not just falling behind, we are desperately failing on that accord. nearly all of the technology and business gains you see today trace back to massive federal Government investments made in thew 1950s, 60s, and 70s. Semi-conductors (NASA), Internet (DARPA), Mobile (NASA), BioTech (NIH) — these all began life as giant, government-funded, pure research projects.
Treasury Secretary Mnuchin is right: Ultra-Long Bonds Can Save U.S. Infrastructure. Here is the full column.
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I originally published this at Bloomberg, August 29, 2019. All of my Bloomberg columns can be found here and here.
