4 ms·

When you control the currency the debt is denominated in you can just devalue it until the debt is no longer a problem. Ordinary debtors don't have that option

When you control the currency the debt is denominated in you can just devalue it until the debt is no longer a problem. Ordinary debtors don't have that option. The comparison is far from apples to apples but sadly too tempting to make due to similar words, and the opportunity to moralize.

throwaway5959 4y ago
And how likely do you think it is that people will continue loaning money to a country whose currency is constantly being devalued? Eventually the dumb money will run out.
- bobkazamakis 4y ago
  >how likely do you think it is that people will continue loaning money to a country whose currency is constantly being devalued? as long as those assets continue to outgain the cost of inflation.
- throwaway98797 4y ago
  countless countries have defaulted on their debt and still get $ see greece, latin america, russia, etc etc
  - foobarian 4y ago
    Also those countries' national currencies are not the most popular oil exchange or global reserve currency. Apples to oranges (or maybe pears?).
  - neilknowsbest 4y ago
    > $ It is observed that sovereign borrowers that inflate their way out of debt find their ability to borrow in the local currency reduced. They may still be able to borrow USD, though. Argentina in particular comes to mind, with something around 50% of total government debt denominated in USD [0]. Even Russia appears to have $40B in USD or EUR debt (private borrowers in Russia have another $100B or so) [1]. Of course, they can still outright renege on this USD denominated debt but it removes the option of inflating it away. [0] - https://www.stlouisfed.org/on-the-economy/2021/august/dollar-exposure-public-debt-asia-latin-america https://www.stlouisfed.org/on-the-economy/2021/august/dollar... [1] - https://www.nytimes.com/2022/03/15/business/russia-debt-bonds-default.html https://www.nytimes.com/2022/03/15/business/russia-debt-bond...
- throwaway6734 4y ago
  The dollar is incredibly strong right now and will most likely be going forward. The US is a military, technological, energy & food producing powerhouse. The alternatives are either getting their asses handed to them in a war against their much smaller neighbor or facing a massive demographics crisis
- matai_kolila 4y ago
phkahler 4y ago
>> When you control the currency the debt is denominated in you can just devalue it until the debt is no longer a problem. That's called inflation, and the public really doesn't like it. Economists don't actually like it either, nor do governments like it to be too high as that can lead to lots of big problems.

throwaway5959 4y ago

And how likely do you think it is that people will continue loaning money to a country whose currency is constantly being devalued? Eventually the dumb money will run out.

bobkazamakis 4y ago
>how likely do you think it is that people will continue loaning money to a country whose currency is constantly being devalued? as long as those assets continue to outgain the cost of inflation.
throwaway98797 4y ago
countless countries have defaulted on their debt and still get $ see greece, latin america, russia, etc etc
- foobarian 4y ago
  Also those countries' national currencies are not the most popular oil exchange or global reserve currency. Apples to oranges (or maybe pears?).
- neilknowsbest 4y ago
  > $ It is observed that sovereign borrowers that inflate their way out of debt find their ability to borrow in the local currency reduced. They may still be able to borrow USD, though. Argentina in particular comes to mind, with something around 50% of total government debt denominated in USD [0]. Even Russia appears to have $40B in USD or EUR debt (private borrowers in Russia have another $100B or so) [1]. Of course, they can still outright renege on this USD denominated debt but it removes the option of inflating it away. [0] - https://www.stlouisfed.org/on-the-economy/2021/august/dollar-exposure-public-debt-asia-latin-america https://www.stlouisfed.org/on-the-economy/2021/august/dollar... [1] - https://www.nytimes.com/2022/03/15/business/russia-debt-bonds-default.html https://www.nytimes.com/2022/03/15/business/russia-debt-bond...
throwaway6734 4y ago
The dollar is incredibly strong right now and will most likely be going forward. The US is a military, technological, energy & food producing powerhouse. The alternatives are either getting their asses handed to them in a war against their much smaller neighbor or facing a massive demographics crisis
matai_kolila 4y ago

phkahler 4y ago

>> When you control the currency the debt is denominated in you can just devalue it until the debt is no longer a problem. That's called inflation, and the public really doesn't like it. Economists don't actually like it either, nor do governments like it to be too high as that can lead to lots of big problems.