As reported on the Planet Money blog:
It sounds ridiculous today. But not so long ago, the prospect of a debt-free U.S. was seen as a real possibility with the potential to upset the global financial system. We recently obtained the report through a Freedom of Information Act Request. You can read the whole thing here. (It’s a PDF.)
The problem? No debt means no T-bonds. Without T-bonds what happens to all the financial instruments linked to T-bond yields? The white paper was co-authored by my old Berkeley mate Jason Seligman.
Cheap Talk 
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October 27, 2011 at 11:01 am
Kevin
In addition, many think that there is a “shortage” of very safe financial assets already. This is often blamed on regulatory restrictions on the types of assets that insurance companies and pensions can hold. Think of the rating agencies giving investment-grade ratings to stuff left-and-right, which opens the assets up to larger pools of investors.
The thirst for safe assets will be much more extreme without tbonds.
December 24, 2011 at 8:03 pm
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Not really sure what you’re talking about