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A 50-Year U.S. Bond Makes More Sense Than Ever

By:  Barry Ritholtz

Let’s imagine a nation with the following characteristics:

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— large but not unmanageable amounts of long-term debt;

— a very high credit rating;

— low or even negative interest rates;

— a stable but slow-growing economy;

— deteriorating and outdated infrastructure;

— an aging population that entails rising health-care and retirement spending, and;

— a tremendous demand for fixed-income securities, the longer the maturity the better.

Don’t leap to the conclusion that the nation is the U.S.; if it were, I would have had to add a bullet point describing it as having a dysfunctional government paralyzed by partisanship.

But regardless of the nation in question, the appropriate approach to financing this debt suggests a long-term bond — whether with a 30-year or even 50-year maturity. Read More….