3 ms·
> Is there any reason not to "borrow" when you're being paid to do so? If negative yields forecast shrinking economy and smaller tax base in a future.. You wil
by chewz 7y ago
> Is there any reason not to "borrow" when you're being paid to do so?
If negative yields forecast shrinking economy and smaller tax base in a future.. You will pay back less nominaly but more in proportion to your revenues. But this is a topic for another time..
- viklove 7y agoIt's still better than not borrowing, isn't it?
- chewz 7y agoGoverment budgets are highly unelastic - railways, submarines, healthcare, pensions must be paid. So even small increase in costs of servicing debt results in embarasing and painfull cuts in elastic areas of the budget. So in general MoFs avoid that unless they are going to pass the ball to the opposition. But of course you have to borrow to roll old debt.
- RockIslandLine 7y ago"But of course you have to borrow to roll old debt." Not if you have your own currency. Currency issuers never need to borrow. It makes no sense to even suggest borrowing something that you can create at will.