Brookings Institute Discussion ft. Larry Summers: Debt Management in an Era of Quantitative Easing: What Should the Treasury and the Fed Do?

Earlier this morning I listened in to a panel discussion hosted by the Brookings Institute on  US debt management since the crisis, and how the Fed and Treasury at time seemed to be working against each other. Unfortunately, the debate stayed within a rigid neoliberal paradigm, with no one suggesting that such debt management operations were convoluted and unnecessary. None of the panelists came close to clearly admitting that the Fed Sets Rates, or the implications of being a sovereign currency issuer. There were no mentions of the changes from Interest on Excess Reserves or the Term Deposit Facility, and the discussion centered mostly on how private investment firms were affected by the change in maturity composition as a result of QE.

To my horror, Mary John Miller, the Former Under Secretary for Domestic Finance at the Treasury, repeatedly used the phrases "taxpayers money" and "reducing costs for the taxpayer" in regards to Treasury's debt management operations, clearly indicating that despite decades in the fixed income sphere she still doesn't quite "get it." Larry Summers was actually quite boisterous and energetic during this discussion, and seemed to come closest to admitting that maturity structure doesn't' really matter for public policy.

As limited as this discussion was intellectually, its worth taking some time to understand how the current people in power think and operate. The audio is now available here, with video to follow.