This is your occasional reminder that the US has the ability to borrow right now at just about the lowest rates in history. 2% for a 10-year Treasury bond was a dream; we’re now in the range of 1.64%. The reasons for that are actually not auspicious: fear over potential economic headwinds have caused a flight to safety in the bond markets, with almost every country in control of their currency seeing their borrowing rates drop. But in the context of a country with stubbornly high unemployment, this is a gift. The markets are begging the United States to borrow more – offering real negative interest rates over a ten-year horizon. The US can use that borrowed money to jumpstart hiring and make a significant dent in the jobless rate. And they can pay back the money, again, AT A NEGATIVE INTEREST RATE, adjusted for inflation. There’s no good reason not to do this, which of course is why we’re not doing it.

This is happening all over the world. Germany, which has effective control of the European Central Bank, saw their two-year notes fall to zero today. The UK, Switzerland, Canada are all seeing this phenomenon as well.

Falling bond yields are a sign of fear among investors. But they can also be a signal of hope. Some of the biggest governments in the world have a broad capacity to borrow loads of money at ultra-low rates – free money, in terms of the borrowing cost over time. Governments should capitalize on it. Instead we have endless debates in the US over deficits, and elsewhere around the world leaders are consumed with austerity and fighting inflation. The pessimism over the global economy is a direct result of bad policy choices being made right now.