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> Unsustainable Debt Levels There's no such thing as unsustainable debt levels in the thing you are the monopoly issuer of.

tinco 12y ago
Sure there is if those debt levels devalue the thing that you use to trade for the goods and resources your country depends on.
- kaonashi 12y ago
  _Deficit_ levels can reduce the exchange rate; but that's not something the U.S. is having problems with at the moment.
  - tinco 12y ago
    It's not? You mean to say debt is not growing any longer? (deficit is growth of debt is it not?) (genuinely curious, I'm only on page 30 of piketty :P)
    - kaonashi 12y ago
      In nominal terms, yes. The point is that it never becomes unsustainable because the interest rates paid are determined by the issuer, and inflation is a product of net spending (deficit). (not really Piketty, more Fullweiler)
Retric 12y ago
Look up hyper inflation and say that again.
- kaonashi 12y ago
  I have; it usually is characterized by a collapse in real output (or loss of a war), accompanied by madly buying foreign currency at increasingly poor rates to pay off foreign debt.
  - Retric 12y ago
    Large amounts of Foreign debt is a result of an inability to sell bonds in your currency. The US has a long history of loan repayment but we still dealt with high levels of inflation fairly recently. As in There where US treasury bonds issued at 17%. Which was vary close to runaway hyperinflation. At current interst rates our debt is sustainable but bump that to 10+% for to long and it would distroy our economy.
    - kaonashi 12y ago
      > As in There where US treasury bonds issued at 17% That has much more to do with large-scale experimentation than exogenous factors. > At current interst rates our debt is sustainable but bump that to 10+% for to long and it would distroy our economy. Without a peg/convertibility the central bank will always have the last say on bond rates[1]. [1] http://www.cfeps.org/pubs/wp-pdf/WP53-Fullwiler.pdf http://www.cfeps.org/pubs/wp-pdf/WP53-Fullwiler.pdf

tinco 12y ago

Sure there is if those debt levels devalue the thing that you use to trade for the goods and resources your country depends on.

kaonashi 12y ago
_Deficit_ levels can reduce the exchange rate; but that's not something the U.S. is having problems with at the moment.
- tinco 12y ago
  It's not? You mean to say debt is not growing any longer? (deficit is growth of debt is it not?) (genuinely curious, I'm only on page 30 of piketty :P)
  - kaonashi 12y ago
    In nominal terms, yes. The point is that it never becomes unsustainable because the interest rates paid are determined by the issuer, and inflation is a product of net spending (deficit). (not really Piketty, more Fullweiler)

Retric 12y ago

Look up hyper inflation and say that again.

kaonashi 12y ago
I have; it usually is characterized by a collapse in real output (or loss of a war), accompanied by madly buying foreign currency at increasingly poor rates to pay off foreign debt.
- Retric 12y ago
  Large amounts of Foreign debt is a result of an inability to sell bonds in your currency. The US has a long history of loan repayment but we still dealt with high levels of inflation fairly recently. As in There where US treasury bonds issued at 17%. Which was vary close to runaway hyperinflation. At current interst rates our debt is sustainable but bump that to 10+% for to long and it would distroy our economy.
  - kaonashi 12y ago
    > As in There where US treasury bonds issued at 17% That has much more to do with large-scale experimentation than exogenous factors. > At current interst rates our debt is sustainable but bump that to 10+% for to long and it would distroy our economy. Without a peg/convertibility the central bank will always have the last say on bond rates[1]. [1] http://www.cfeps.org/pubs/wp-pdf/WP53-Fullwiler.pdf http://www.cfeps.org/pubs/wp-pdf/WP53-Fullwiler.pdf