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> How exactly would a government that prints USD have trouble repaying a loan denominated in USD? If you print too much money you might end up with hyperinflat
by dmurray 8y ago
> How exactly would a government that prints USD have trouble repaying a loan denominated in USD?
If you print too much money you might end up with hyperinflation and bad effects for your citizens. That's just as big "trouble" as a personal bankruptcy.
That's not a real risk for the US at the moment, but it's a backstop that answers the question of "why can't we solve all our economic problems by borrowing or printing more money?"
- crdoconnor 8y ago>If you print too much money you might end up with hyperinflation That's about the rate of spending exceeding the economy's ability to produce, not the overall level of debt. It can even happen in surplus. Every country that has suffered hyperinflation had it come about because of a critical reliance upon imports and/or a debt denominated in a foreign currency. Zimbabwe didn't face hyperinflation because the deficit was a bit too high. It faced hyperinflation because they took on foreign debts which they tried to pay back and destroyed their farms. >That's just as big "trouble" as a personal bankruptcy. And a totally different economic problem. >That's not a real risk for the US at the moment And it likely never will be and still has nothing to do with aggregate debt to GDP.