4 ms·

this is a bad article it harps incessantly on debt, throwing out scary, big numbers ($250T! $40T in china!) but doesn't explain why increasing government debt

this is a bad article it harps incessantly on debt, throwing out scary, big numbers ($250T! $40T in china!) but doesn't explain why increasing government debt is an issue there is a reason to worry if the interest rate on the government debt is larger than the growth rate of the economy currently that average interest rate is below 3 percent [1], so for any countries with >3% economic growth, it really doesn't matter - they'll be able to make their interest payments to one another (most big holders of gov debt are other govs themselves) financial and household debt is down across developed economies, and corporate debt is about the same as it was in 2008 furthermore there is no discussion of what could trigger a debt collection death spiral/meltdown, other than "the world's second largest economy is now coming to terms with rising corporate defaults", backed up by 0 context or data the real worry would be continued slowdown in GDP growth ala "secular stagnation" that many prominent economists are exploring - if you're not growing your income, you can't pay down your debt, and you have to start cutting costs (healthcare, education, defense) debt has a bad connotation and is easy to sensationalize, so articles like this get attention, but there's no news, argument, or takeaway to be had from reading it [1] https://www.nytimes.com/2018/09/11/opinion/on-the-debt-non-spiral.html https://www.nytimes.com/2018/09/11/opinion/on-the-debt-non-s...

pas 8y ago
re. stagnation: https://www.project-syndicate.org/commentary/secular-stagnation-excuse-for-flawed-policies-by-joseph-e-stiglitz-2018-08 https://www.project-syndicate.org/commentary/secular-stagnat...
jdkuepper 8y ago
Dollar-denominated debt in emerging markets is the big exception. If the dollar rises, those debts become more expensive to repay, regardless of the emerging market's underlying economy. That's why Ukraine, Argentina, Turkey and Brazil have seen the recent volatility. The question is whether these problems are limited to those countries with high dollar debt or whether it could cause a regional capital outflow that reduces economic growth in neighboring countries or trade partners.
jondubois 8y ago
>> currently that average interest rate is below 3 percent [1], so for any countries with >3% economic growth, it really doesn't matter - they'll be able to make their interest payments to one another What does 3% economic growth mean? Is it measured in terms of that country's own currency? But isn't that currency's value inversely proportional to the amount of money which was borrowed from the Fed? So the higher the interest rate is, the more new money the government has to borrow from the Fed in order to pay back its old debt, the less the currency becomes worth, the less meaningful this 'economic growth' percentage becomes (because that growth is measured in this fast-deflating currency). This seems to be mind-numbingly complex.
- ArchTypical 8y ago
  > Is it measured in terms of that country's own currency? No. The obvious makes that a useless measure. GDP is used, modified to ignore what government factions like to conveniently manipulate or modify. Lumping in tech stocks and pharma was the latest trick in the USA.

pas 8y ago

re. stagnation: https://www.project-syndicate.org/commentary/secular-stagnation-excuse-for-flawed-policies-by-joseph-e-stiglitz-2018-08 https://www.project-syndicate.org/commentary/secular-stagnat...

jdkuepper 8y ago

Dollar-denominated debt in emerging markets is the big exception. If the dollar rises, those debts become more expensive to repay, regardless of the emerging market's underlying economy. That's why Ukraine, Argentina, Turkey and Brazil have seen the recent volatility. The question is whether these problems are limited to those countries with high dollar debt or whether it could cause a regional capital outflow that reduces economic growth in neighboring countries or trade partners.

jondubois 8y ago

>> currently that average interest rate is below 3 percent [1], so for any countries with >3% economic growth, it really doesn't matter - they'll be able to make their interest payments to one another What does 3% economic growth mean? Is it measured in terms of that country's own currency? But isn't that currency's value inversely proportional to the amount of money which was borrowed from the Fed? So the higher the interest rate is, the more new money the government has to borrow from the Fed in order to pay back its old debt, the less the currency becomes worth, the less meaningful this 'economic growth' percentage becomes (because that growth is measured in this fast-deflating currency). This seems to be mind-numbingly complex.

ArchTypical 8y ago
> Is it measured in terms of that country's own currency? No. The obvious makes that a useless measure. GDP is used, modified to ignore what government factions like to conveniently manipulate or modify. Lumping in tech stocks and pharma was the latest trick in the USA.