Paulson Says US Should Prepare for a 'Vicious' Bond Crash

Summary

Former Treasury Secretary Hank Paulson warns of a potential vicious crash in the U.S. Treasury market, where the Fed becomes the only buyer and prices plummet. He urges authorities to prepare a targeted emergency plan to avert a collapse in demand. The interview focuses on the risks to the bond market and the need for contingency measures.

• Hank Paulson discusses the risk of a Treasury market crisis.
• He describes a scenario where the U.S. hits a wall in issuing Treasuries and the Fed becomes the only buyer.
• Treasury prices could fall sharply while interest rates rise, leading to a vicious crash.
• Paulson emphasizes the importance of preparing an emergency brake plan that is targeted and short-term.
• He argues that the crisis would be different and dangerous.
• The plan should be on the shelf and ready to deploy when needed.