4 ms·
When the state's debt growth is unbounded with the feature (not bug) of money printing and suppressed interest rates, eventually that printing and spending outs
by netbioserror 3y ago
When the state's debt growth is unbounded with the feature (not bug) of money printing and suppressed interest rates, eventually that printing and spending outstrips the real economy's ability to extract and utilize resources to generate value; people are unable to produce faster than the currency can inflate. Thus, you then have a net negative economy, where the state's deficits are consuming all newly generated wealth PLUS the wealth generated by previous generations. An inflection point. A country begins to quite literally eat itself alive.
- brookst 3y agoGood platonic philosophy, but it breaks for anyone aware of productivity increases.
- netbioserror 3y agoYearly productivity increases are finite. States have demonstrated a remarkable ability to out-debase and out-spend productivity increases, well across history, geography, and cultures.
- mindslight 3y ago> where the state's deficits are consuming all newly generated wealth PLUS the wealth generated by previous generations Why focus solely on the state's deficits? To me, this is exactly the situation we currently have with housing - asset inflation for the past few decades has outstripped real growth, and now housing debt/rent is consuming an ever-growing amount of newly generated wealth. (The debt/rent payments go to someone else, but the payments on sovereign debt do so as well. The point is they leave the system under discussion)
- netbioserror 3y agoTrue, but a big part of this is suppressed interest rates, which are a downstream effect of suppressed bond rates. These two effects hold hands: State largess fuels private sector largess.