Debt Management

I discovered "debt management" in December, 1992, in the Encyclopedia of Economics. According to that book, debt management is a strategy used by national governments and others who wish "to maintain a permanent total volume of debt."

"To maintain a permanent total volume of debt."

Let's put that in perspective. In his 1996 book The Truth about the National Debt, Francis X. Cavanaugh -- "the senior career executive responsible for debt management policy advice in the Treasury Department" -- wrote:

"We have never raised the taxes needed to pay off the World War II debt and probably never will; we just keep rolling it over, refinancing with issues of new Treasury securities to replace the old securities as they come due."

Rolling it over, not paying it off. That's how debt accumulates. It's why debt needs to be "managed." But debt accumulation and debt management didn't begin in the 1990s. Thirty years earlier, Time magazine observed that people no longer expect

"that Government will ever fully pay off its debt, any more than General Motors or IBM find it advisable to pay off their long-term obligations; instead of demanding payment, creditors would rather continue collecting interest."

Creditors would rather continue collecting interest. As Oscar Wilde said, "It is better to have a permanent income than to be fascinating."

Permanent income. Perpetual debt. The Skeptical Optimist summarizes the notion of debt management:

This is perfectly sound financial practice. Successful businesses roll over their long-term debt all the time, just as the federal government has been doing for generations.

Everybody thinks accumulating debt is okay. And, well, it is okay, until it becomes a problem.

Maintaining a permanent total volume of debt. Rolling it over. Refinancing. Providing a permanent income to our creditors. Debt management, they call it. An ironic term, surely. Like methadone maintenance, it keeps us on the stuff forever.