(April 6) – “A world without a Treasury market?,” asks Jonathan Fuerbringer in today’s New York Times. That was unimaginable a few years ago, when budget deficits stretched as far as the eye could see. But with a rising government surplus, the unthinkable no longer seems beyond the pale.

“Many traders and analysts, expecting the White House and Congress to give away most future surpluses through tax cuts and spending, still consider the Treasury market’s demise unlikely.

“But because the projected surpluses are large and have a momentum of their own, it could happen a lot faster than many think.

“The United States, to make ends meet, has been borrowing since the nation was born, especially during wartime. But the Treasury market as we know it today did not take shape until the mid-1970’s, when deficits soared in the wake of a severe recession and rising oil prices. The wild volatility of interest rates late in the decade and into the 80’s focused intense attention on the bond market.

“That spawned the growth of a Wall Street infrastructure, fostered the bond-trading ‘masters of the universe’ of ‘Bonfire of the Vanities’ fame, and made the Treasury market the benchmark for the world’s bond markets, a haven for cautious investors around the globe.

“But now, the trusty 30-year bond is threatened with retirement, a move recommended by a Treasury advisory group. Other maturities and types are also vulnerable. The last one-year Treasury bill was issued in February, and inflation-indexed bonds are on the chopping block.

“Any threat to the Treasury market has been dismissed by many because they simply do not believe that the surpluses will last.