Why the world needs more U.S government debt.The U.S. generates more income than any other country, and will keep doing so for many years to come. The federal government can generate a lot of revenue by taxing this income a power that puts it in a unique position to issue the kind of extremely safe bonds that are in great demand among the world's investors.The yield on a 20-year inflation-protected Treasury bond, at just over 0.5 percent, is nearly two full percentage points lower than it was 10 years ago. This means that the price is near record highs, suggesting that the U.S. government's supply of such safe investments is falling far short of demand. In other words, we're starving the world of desperately needed financial safety.To some, the idea that the U.S. government isn't issuing enough debt may seem counter intuitive after all, federal debt outstanding has more than doubled over the past 10 years. But scarcity is not about supply alone. In the wake of the financial crisis, households and businesses are demanding more safe assets to protect themselves against sudden downturns. Similarly, regulators are requiring banks to hold more safe assets. Market prices tell us that the government needs to produce more safety in order to meet this increased demand.The scarcity of safety creates hardships for people and businesses. Retirees can't get adequate returns on their nest eggs. Banks can't earn enough on safe, long-term investments to cover the costs of attracting deposits (interest rates on which can't fall much below zero).