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U.S. debt was a better investment than gold this year

at 11:37 AM ET, 12/30/2011

Inside the Beltway, our country’s debt load was politically toxic in 2011, but in the global marketplace, it was even better than gold. The euro-zone crisis sent investors fleeing for the relative safety of U.S. Treasurys. Now the U.S. bond market is set to have its best year since 2008, with a 13.7 percent return — significantly outperforming the stock market in 2011. What’s more, the Wall Street Journal points out, “the biggest star was the 30-year Treasury bond, with a 35% return, far outpacing even gold, another favorite safe-haven asset.”

As of yesterday, the yields on five-, seven- and 10-year bonds were all still negative, meaning that investors are paying the U.S. to hold onto their money. This builds the case for why the United States should actually be borrowing aggressively right now, as Ezra explained earlier. But these market realities still don’t seem to have shifted attitudes within Congress. The U.S. is due for another debt-ceiling increase in a few weeks. And, as Politico reports, House Republicans are expected to demand a vote on it next month, even though the increase was agreed to during August’s bipartisan debt deal.

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