Saved by Kaustubh Sule
Spiralling Government Debt Isn’t a Choice
The first is our best-case scenario, although for the reasons I have noted it is unlikely to describe conditions today, especially in capital-rich countries like the U.S. The second and third ways are unsustainable because they actually destroy value by increasing debt faster than they increase debt-servicing capacity.
Michael Pettis • The Great Rebalancing
... See moreStarting with the “Great Society” splurge in the 1960s, which created many social programs but failed to provide any way to pay for them, America has become accustomed to living beyond its means, essentially by borrowing huge amounts of money and passing the debt along to future generations. (An admirable exception was the Clinton presidency, which
A country with well over 100% debt-to-GDP has two main choices in this scenario. The first choice is that they can keep interest rates very low despite periods of price inflation that occurs, and debase all of the currency holders and bond holders. Japan is far enough into fiscal dominance that they’ve chosen that route. The second choice is that
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