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Money And The Public Debt: Treasury Market Liquidity As A Legal Phenomenon, Lev Menand, Joshua Younger
Money And The Public Debt: Treasury Market Liquidity As A Legal Phenomenon, Lev Menand, Joshua Younger
Faculty Scholarship
The market for U.S. government debt (Treasuries) forms the bedrock of the global financial system. The ability of investors to sell Treasuries quickly, cheaply, and at scale has led to an assumption, in many places enshrined in law, that Treasuries are nearly equivalent to cash. Yet in recent years Treasury market liquidity has evaporated on several occasions and, in 2020, the market’s near collapse led to the most aggressive central bank intervention in history.
This Article pieces together what went wrong and offers a new account of the relationship between money issue and debt issue as mechanisms of public finance. …