The optics of America’s national debt crossing $40 trillion has alarmed markets. Last week’s announcement by the US Treasury of a $6 billion buyback operation is marginal at best and unlikely to calm investors, as seen by the knee-jerk rise in bond yields.

Buybacks of long-term debt could have other unintended consequences for financial stability, in the form of longer collateral chains, clogged market plumbing and more volatile repo rates. This could accelerate deleveraging and contagion if the