4 ms·
If they expire you have to manage the rolling over (creating debt to pay off other debt). If the interest rates have gone up since the original loan, you pay mo
by ArnoVW 6y ago
If they expire you have to manage the rolling over (creating debt to pay off other debt). If the interest rates have gone up since the original loan, you pay more.
This is often forgotten when people say 'but the state can get 0.01% interest loans!'. Sure, true, but if the rate goes to 5%, that 3xGNP loan becomes quite cumbersome to service.
At 2.5% fixed forever perhaps it's interesting to keep. Also, I suppose that there are not many bonds that survive 367 year. So a lot of the debt 'disappears' as time goes on.
- kennywinker 6y agoMy mortgage does not need to be re-financed in 25 years, since it’s designed to be paid off by then. Since that’s been my main interaction with debt to date, I assumed that’s how it always works. I’m starting to suspect from the comments here that was a bad assumption
- djbebs 6y agoMost debt at this level works with coupons. The debtor simply pays the interest every year and at the end returns the principal