Back in my time as an undergraduate one of the things I learned about was “sinking funds”.
These were repayment schedules for the national debt, structured in the same way as a mortgage, such that not just the debt interest but the debt principle was repaid. The debt was extenguished. Sometime in the 1980s we seemed to stop this and instead now of retiring the debt when it matures we simply roll it over. This was the conversion, if you want to think of it, of the economy mortgage from a regular to an interest only affair.
Slate blogger Matt Yglesias has taken this one step further and suggests that the US issue perpetuities – these are bonds that pay a rate of interest but never actually expire. The argument he makes is that right now the USA can borrow at extremely low rates of interest. So also can Germany by the way…Therefore the argument runs that they should take advantage of these low rates, and convert a large chunk of debt to consols, perpetuities. This would reduce the interest rate bill and allow more borrowing for stimuli
Ireland couldnt issue perpetuities at the low rates of the USA and UK. We cant issue any bonds at present. But we should resolve to do two things when we do go back into the markets. First, we should issue long dated bonds at any opportunity when the long bond yield is below the maturity adjusted rate on the debt. There were period recently when this might have been feasible. Second, we should reintroduce the good old fashioned approach of establishing sinking funds, setting aside not just interest but repayment of principle costs also.