4 ms·
Probably, but it will depend on the interest rate. The lower the interest rate, the higher the safe level of debt. Right now federal bonds have a negative int
by solresol 6y ago
Probably, but it will depend on the interest rate.
The lower the interest rate, the higher the safe level of debt.
Right now federal bonds have a negative interest rate, so perhaps there is no limit to the amount of debt, and in fact that there might be a minimum safe lower bound. Or maybe not; we don't have much experience in dealing with this sort of situation since it was seen to be impossible.
Putting that aside, the UK had debt around 200% of GDP after the Napoleonic Wars, and eventually paid most of it down. So the "bad & unsustainable level" appears to be well above that.
- MLR 6y agoThat was in the midst of the Industrial Revolution and during a time when the UK also had direct and indirect control of exploitable colonies, I don't think the debt to GDP figures of the time are particularly relevant to modern nation states. Japan has avoided financial collapse with a giant debt to GDP ratio for years now, I think the advent of QE and owning your own debt via central banks has made the whole thing seem a bit silly.
- mistermann 6y ago> The lower the interest rate, the higher the safe level of debt. Provided the interest rates don't rise before the debt is paid off that is. Serviceable might be a better word.