For the purpose of this thought experiment, let's pretend the US wasn't currently being led by an insane president.
Anyway, US Treasury bonds are one of the most sought after investments in the world. They represent the risk free rate or return, and diversified portfolios everywhere want to hold them as part of safe asset allocations. This works well for the US because we love borrowing money to fund government activities.
Well, what if we finally get our shit together and balance the budget. No more debt. Probably some short term borrowing because taxes are not necessarily collected on time to cover all expenses, but by year end the US has all necessary revenue to cover all bills.
In this scenario, I feel that yields would go way down. After all, the US doesn't need to issue bonds, it doesn't need to borrow money. therefore demand would outstrip supply, driving down rates for the bonds that do exist. In theory this could have a big impact on the overall economy, driving down rates across the board.
Of course I could be way off base. so please chime in with various perspectives on how this could play out.