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I am a big fan of Treasury Secretary Scott Bessent's straightforward and understandable approach to discussing geopolitical and financial issues. However, I am not convinced that efforts to influence the long end of the Treasury yield curve are the right answer to the United States' current fiscal challenges.

The concept brings to mind "Operation Twist," the Federal Reserve strategy first used in the 1960s and later revisited in 2011–2012. The basic idea was to influence different portions of the Treasury yield curve by keeping pressure on short-term rates while attempting to reduce longer-term rates.

The objective was to narrow the spread between short- and long-term rates without relying solely on aggressive reductions in short-term interest rates.

Today, the circumstances are different, but the underlying debate is similar.

Lower long-term Treasury yields can reduce borrowing costs for mortgages, businesses, and, importantly, the federal government. On the surface, that sounds like a good thing.

But there is a bigger issue.

The United States has accumulated an enormous amount of debt, and the cost of servicing that debt has become a significant component of federal spending. When the amount of money required simply to service existing debt continues to increase, lowering interest rates can provide temporary relief—but it does not address the underlying problem.

To put it in simple terms: imagine earning $100,000 a year, owing $1 million, and spending $30,000 of your annual income just on interest.

Something has to change.

In my view, the fundamental problem isn't simply the interest rate. It is spending.

That is why I am skeptical of efforts to push long-term interest rates lower as a solution to the country's fiscal challenges. Lower rates may reduce the immediate cost of borrowing, but they can also reduce the pressure to address the underlying imbalance between government spending, revenues, and accumulated debt.

Recent Treasury actions have brought this debate into sharper focus. Treasury has increased its purchases of longer-dated Treasury securities, with the stated objective of improving market liquidity and addressing conditions in the long end of the Treasury market. The move has also generated debate about whether such intervention can meaningfully reduce longer-term borrowing costs without addressing the larger fiscal forces affecting Treasury yields.

That brings me to Stanley Druckenmiller.

In a recent Wall Street Journal editorial, Druckenmiller criticized Treasury intervention in the long end of the bond market. His broader argument is that financial markets incorporate enormous amounts of information into prices and that the long-term Treasury yield provides an important signal about investors' assessment of the government's fiscal position.

His argument is worth considering: if policymakers suppress the cost of long-term borrowing, they may also reduce the financial pressure to confront the underlying fiscal problem.

I find that argument compelling.

There is an important distinction between fiscal and monetary policy.

The Treasury Department, under Secretary Bessent, is responsible for federal borrowing and debt management, along with other aspects of fiscal policy. The Federal Reserve, by contrast, is responsible for monetary policy, including setting short-term interest rates and managing monetary and credit conditions.

Those two policies inevitably interact.

If the Treasury seeks to reduce long-term borrowing costs while the Federal Reserve is focused on maintaining appropriate monetary conditions and controlling inflation, the two objectives can potentially work against one another.

That is where I believe the debate over "Operation Twist" becomes particularly interesting.

Lowering long-term rates may reduce the government's near-term interest expense, but it doesn't make the underlying debt problem disappear.

And that is my concern.

Financial markets ultimately have a way of forcing difficult questions. If the United States continues to accumulate debt faster than it can reasonably support, investors may eventually demand greater compensation for taking that risk.

We can debate whether that compensation should come in the form of higher interest rates, inflation, slower economic growth, higher taxes, lower spending—or some combination of all of them.

But we shouldn't confuse lowering the cost of borrowing with solving the reason we need to borrow so much in the first place.

For me, that is the fundamental problem with relying on market intervention to address the cost of government borrowing.

It may address the symptom. It doesn't address the disease.

And when it comes to the national debt, I think we need to focus a lot more attention on the disease.

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