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Someone owns that debt. Most of it is government debt. The problem with government debt is people without any creativity can just buy government debt and earn
by narrator 6y ago
Someone owns that debt. Most of it is government debt. The problem with government debt is people without any creativity can just buy government debt and earn interest on trillions just betting on the government's ability to tax and get into more debt.
- ausbah 6y agothat's why the interest rates for government bonds, at in the US, are so low - they're essentially risk free. the issue is the interest rates are so low they don't even beat inflation as far as I know
- PragmaticPulp 6y ago> Most of it is government debt No, it’s mostly private sector debt. Read further down in the article to where the author separates out government debt, which is less than 1/3 of the total. Also, you’ve misunderstood the purpose of cheap debt. If the debt encourages growth, the denominator of the debt to GDP ratio increases and the percentage goes down. It’s not a perfect instrument, but it’s simply not true that creative people are flipping government debt into risk-free interest accruing assets elsewhere. It has to be invested to outdo government interest rates. That’s the entire point.