3 ms·
Most of the debt is shorter term and must be continually rolled over. So when first moving from low expectations of inflation to high expectations, there is a t
by readams 4y ago
Most of the debt is shorter term and must be continually rolled over. So when first moving from low expectations of inflation to high expectations, there is a temporary one-time gain, but after that the government will need to pay higher interest.
And of course when the expectations return to normal there is a period when the government must pay higher than needed rates.
- dnadler 4y agoGood point - that's all true. Another important point is that the principal has also been impacted by inflation and the amount that needs to be rolled is less than the initial bond in real terms.
- upsidesinclude 4y agoSo the government just maxed out on an ARM they can't afford