Smart. Why wouldn’t you do this in sustainable amounts. For example many Americans don’t pay off their mortgage as the money is better put in investments long term. Why should our country be any different?
Why shouldn’t the government borrow money at low rates to spend in ways that raises gdp generating new tax revenues that are higher than the interest paid for said loan?
They may not pay it off, but they have to at least make monthly payments to pay the principal down. For good reasons no bank is going to give a mortgage holder an ever-increasing line of credit on a home mortgage.
But only because the mortgage holder is going to die one day. That's the big difference between you and a corporation or nation. The country can revolve its debt forever.
There is a limit to how much debt it can support, but it's determined only by that country's productivity and tax structure. As long as it can pay the interest, it can keep growing its debt.
Eventually that reaches equilibrium, but there's no reason for any particular $BIGNUM to be the equilibrium point. It's currently around 10% of all spending, which strikes me as a large but not unsupportable number.
It's more like the wealthy's "buy, borrow, die" strategy [1] without the cumbersome "buy" part. Japan's debt to gdp is almost 200% as the population decline continues. Confidence won’t evaporate until the market determines productivity can’t meet the yield bought. Somebody is going to be left holding the bag, but it ain’t anybody investing today.
Refinancing old expensive debt with cheaper debt, while waiting for inflation and economic growth to devalue the priciple. It standard and pretty sensible.
As far back as I can remember people have been telling me the national debt would come back to bite us, but it hasn't happened yet. Things like the 'debt ceiling' are at best no better than a New Years resolution that gets quickly forgotten, but more likely just an opportunity for politicians to get additional audio and video clips for their next campaign. The government will spend whatever it wants.
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[ 3.5 ms ] story [ 57.3 ms ] threadWhy shouldn’t the government borrow money at low rates to spend in ways that raises gdp generating new tax revenues that are higher than the interest paid for said loan?
There is a limit to how much debt it can support, but it's determined only by that country's productivity and tax structure. As long as it can pay the interest, it can keep growing its debt.
Eventually that reaches equilibrium, but there's no reason for any particular $BIGNUM to be the equilibrium point. It's currently around 10% of all spending, which strikes me as a large but not unsupportable number.
[1] https://www.youtube.com/watch?v=8pBPZMUcsh0
We could even make a small, green, square certificate and put a president's head on it.
The other question is: is the world planning on buying that garbage for the next 10 years and sitting on it "earning" negative interest?
I don't think so.