Only two cheers that governments and companies are issuing more long-dated debt. On the one hand, it is a welcome return to normality. After all, you cannot expect roads and companies' investment plans to be financed solely with 90-day money. But it is also bad in that longer-dated debt costs more. That is especially so at the moment, given the steepness of the yield curve. Companies might be able to afford it. Governments cannot.

A back-of-the-envelope calculation shows how painful those extra costs might be. During the financial crisis, governments have funded themselves disproportionately with bonds of maturities of less than a year. A decade ago in the US, for example, a fifth of all bonds held by the public was short-dated money. Now it's a third. This has had some benefit. Given that short rates are in effect zero, it shrank the US government's blended interest cost to about 2.5 per cent. Assume a “normal” term structure, however, with more long-dated bonds, and the cost would rise to about 3.2 per cent.

On the $7,000bn of US government bonds held by the public, that increase would translate to an extra $45bn a year, or 0.3 per cent of gross domestic product. For the UK, the extra cost would be about 0.4 per cent of GDP. As for Japan, the world's most indebted country, if it had to finance itself solely with bonds instead of bills, its interest cost might be a whole point of GDP higher. Such numbers are a worry on their own. But they could also have a snowball effect. As maturities lengthen and debt costs rise, investors might start to demand higher yields to compensate for the extra risk. That would increase interest costs further, and so on in
a vicious circle. Normality comes with a cost.