Is this a good time to borrow money?

The question is not whether the current policy path is acceptable. The question is, what should be done? To come up with a viable solution, consider the remarkable level of interest rates in much of the industrialized world. The U.S. government can borrow in nominal terms at about 0.5 percent for five years, 1.5 percent for 10 years and 2.5 percent for 30 years. Rates are considerably lower in Germany and still lower in Japan.

Even more remarkable are the interest rates on inflation-protected bonds. In real terms, the world is prepared to pay the United States more than 100 basis points to store its money for five years and more than 50 basis points for 10 years. Maturities would have to reach more than 20 years before the interest rates on indexed bonds becomes positive. Again, real rates are even lower in Germany and Japan. Remarkably, the United Kingdom borrowed money last week for 50 years at a real rate of 4 basis points.

Read the rest here.

As much as I loathe debt, part of this argument is compelling. If people are basically prepared to pay the government to lend it money my gut says to go for it. Eventually the bubble in the bond market will burst. When it does and interest rates begin to rise there is going to be a mad rush for the exits. At that point the pendulum could swing violently in the other direction and it could become extremely expensive for the US Government to borrow money.  It is a sad truth that the government must borrow money right now to meet its obligations. But given that reality, it would be idiotic not to take advantage of the lowest interest rates since Harry Truman was president.