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Yeah, don't borrow in someone else's currency is a pretty important point, the 10 year Danish Krone Bond is at a -0.48%. If you have to borrow in someone else's
by JamisonM 7y ago
Yeah, don't borrow in someone else's currency is a pretty important point, the 10 year Danish Krone Bond is at a -0.48%. If you have to borrow in someone else's currency then you are absolutely /not/ the same position that Denmark is right now.
- gridlockd 7y agoThe reason Turkey has to borrow in someone else's currency is that their own currency doesn't have the credibility it needs to support low interest rates, so if they want to borrow at affordable rates to boost their economy, they need to use foreign currency. If the US keeps up the deficit spending, it will either need to pay a huge amount of money on debt service, or it needs to monetize its debt - which means credibility will be lost and new debt will be more expensive. Either way, it's not a free lunch.
- JamisonM 7y ago> Either way, it's not a free lunch. Yes there is no free lunch, in particular for any country that is in a completely different circumstance than the country we are discussing.