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Everything goes up forever until it doesn't. Japan hasn't recovered from highs like 30 years ago. One reason foreign debt may not matter is because when you ha

Everything goes up forever until it doesn't. Japan hasn't recovered from highs like 30 years ago. One reason foreign debt may not matter is because when you have the most powerful military in the world, some of the most fertile land (food), natural barriers (defenses), and cultural hegemony (arguably America's real export, and English is like a virus) who is going to make you repay it and how exactly?

fsckboy 4y ago
> who is going to make you repay it and how exactly? people are used to thinking of personal debt which they need to repay. Corporate debt is not repaid, the %age is considered part of the "capital structure" of the company. It's a type of ownership, equity holders own the frothy top of the company, bondholders own the underlying assets at the bottom. As corporate bonds are repaid, new bonds are issued, renewing the debt. The fixed %age interest payments on the debt are a cheap way for the equity holders to increase their profits. Government debt is more in the category of corporate debt, repaying it is not part of the plan, the goal is to move future spending into the present for long term infrastructure projects, etc. And as long as the economy grows so the debt percentage stays manageable, it's not an issue.
- llanowarelves 4y ago
  Thanks for the well-reasoned response. I hadn't considered that angle and have to think on it. But if growth stops..
- vineyardmike 4y ago
  > And as long as the economy grows so the debt percentage stays manageable, it's not an issue What happens when it stops growing? Italy, Greece, Japan want to know. China and the US could use the info for later too.
- christophilus 4y ago
  Companies who roll their debt are about to hit a world of pain. The US treasury interest rate dictates just about all other rates, and it has more than doubled since its lows. All of the folks decrying high corporate profits are about to get their wish, as interest and inflation will begin to eat into those profits. At least, that’s my guess as to how the next few quarters play out. Who knows what happens afterwards? As for governments being somehow immune from the physics of economics, I’m a skeptic. It takes longer for government-scale economics to play out. It’s like climate change in a way. My guess is it’ll play out, and we won’t like the consequences, but it’ll be too late to fix things by the time we’re really grappling with them. We’ll know who’s right in a few decades.

fsckboy 4y ago

> who is going to make you repay it and how exactly? people are used to thinking of personal debt which they need to repay. Corporate debt is not repaid, the %age is considered part of the "capital structure" of the company. It's a type of ownership, equity holders own the frothy top of the company, bondholders own the underlying assets at the bottom. As corporate bonds are repaid, new bonds are issued, renewing the debt. The fixed %age interest payments on the debt are a cheap way for the equity holders to increase their profits. Government debt is more in the category of corporate debt, repaying it is not part of the plan, the goal is to move future spending into the present for long term infrastructure projects, etc. And as long as the economy grows so the debt percentage stays manageable, it's not an issue.

llanowarelves 4y ago
Thanks for the well-reasoned response. I hadn't considered that angle and have to think on it. But if growth stops..
vineyardmike 4y ago
> And as long as the economy grows so the debt percentage stays manageable, it's not an issue What happens when it stops growing? Italy, Greece, Japan want to know. China and the US could use the info for later too.
christophilus 4y ago
Companies who roll their debt are about to hit a world of pain. The US treasury interest rate dictates just about all other rates, and it has more than doubled since its lows. All of the folks decrying high corporate profits are about to get their wish, as interest and inflation will begin to eat into those profits. At least, that’s my guess as to how the next few quarters play out. Who knows what happens afterwards? As for governments being somehow immune from the physics of economics, I’m a skeptic. It takes longer for government-scale economics to play out. It’s like climate change in a way. My guess is it’ll play out, and we won’t like the consequences, but it’ll be too late to fix things by the time we’re really grappling with them. We’ll know who’s right in a few decades.