The U.S. government has made a set of promises that it cannot keep. The current level of outstanding debt is a relatively small part of the problem. Therefore, inflation is unlikely to solve the problem. The promises that are most important to change are Social Security and Medicare. It is easy...

We examine the risk characteristics of each portion of IO/PO mortgage strips, present results of a valuation model of these securities, and examine market prices of both the interest-only and principal-only portions of mortgage pools. We show that IO/PO securities are highly sensitive to the...