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Many countries have been above 100% for a while now without any apparent issues

• Ekaros 4y ago
  Central banks are only recently been making things harder. Previous 10 or so years were quite easy on government debt. Even in some cases being negative.
  • landemva 4y ago
    Central bank zero interest rates decimated pension and annuity earnings.
• LastNevadan 4y ago
  It's not a hard-and-fast rule. The problem is this: once you have a high level of debt, you become sensitive to interest rate changes. Your debt rises, so you have to increase interest rates to lure investors to buy the bonds. The high interest rate forces to you run a bigger deficit, do you have to borrow even more money. Then investors demand an even high risk premium. That's the cycle. Once that process takes hold, the only way out is some combination of lower living standards, higher taxes, higher inflation and currency devaluation. You're right that it hasn't happened yet in the modern era. But it will. Remember where you heard it first.
  • ProjectArcturis 4y ago
    >Remember where you heard it first. I first heard it in a book written in 1986. It showed debt growing exponentially and forecast hyperinflation and economic collapse. People have been crying about that particular wolf for quite a long time.