In early 2014, the United States government had more than $17 trillion in debt (approximately $55,000 for every U.S. citizen) outstanding in the form of Treasury bills, notes, and bonds. That number is now $20 trillion and growing. From time to time, the Treasury changes the mix of securities that it issues to finance government debt, issuing more bills than bonds or vice versa. With short-term interest rates near 0 percent in early 2014, and still very very low historically today, suppose the Treasury decided to replace maturing notes and bonds by issuing new Treasury bills, thus greatly shortening the average maturity of U.S. debt outstanding. Discuss the pros and cons of this strategy.

This is a very real-life question which our Government has been facing since the financial crisis of 2007-2008. With interest rates falling after the financial crisis to historical lows, which they are still by and large at today but rising slowly again, the Government has a tough decision, especially with regards to the old debt it issued at higher interest rates to finance the Government. Refinance that debt? If so, for how long of a period of time and at what rate of interest are buyers willing to go out when buying the new Government T-bills, bonds, etc.?

Is there any difference between the US Government issuing Notes vs. Bonds? If so, what factor(s) would drive that difference(s) in what type of debt instrument the government should issue or reissue in the case of this DQ?