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If the economy grows by ~3% per year on average, and the interest rate is ~1% on government debt, can the debt actually "catch up"?
by gerbal 6y ago
If the economy grows by ~3% per year on average, and the interest rate is ~1% on government debt, can the debt actually "catch up"?
- contravariant 6y agoDepends how big a deficit you're running each year. But 'catch up' is a really vague term. As long as you can keep borrowing at low interest rates there's no problem, you can just borrow more to pay the interest, but eventually people will start to doubt your ability to pay it all back (yes this is irrelevant if a country exists forever, but infinity is weird like that).