National debt is always a controversial topic for economists, and this just seems like a standard MMT (Modern Monetary Theory) opinion. I haven’t studied any economics, but there are a few...
National debt is always a controversial topic for economists, and this just seems like a standard MMT (Modern Monetary Theory) opinion.
I haven’t studied any economics, but there are a few concerns I have that seem to be unaddressed.
If governments fund by printing, the type of spending seems to be important. For example, if governments fund tax cuts on the wealthy by printing, I imagine this would effectively act as a regressive tax via inflation. Especially on asset prices like housing.
If governments fund with bonds, bond ownership seems very important. For example, if a government’s debt is primarily owned by foreign entities, this should theoretically siphon money away from the country’s economy in the long-term. I know Japan’s excessive debt is causing their currency to weaken, but I don’t know what the long-term impacts of that are.
It doesn't look like there's any consensus that the yen's decline has much to do with Japan's government debt? The articles I've seen (from May) blamed it on a strengthening US economy, which...
It doesn't look like there's any consensus that the yen's decline has much to do with Japan's government debt? The articles I've seen (from May) blamed it on a strengthening US economy, which would tend to reduce demand for Yen-denominated investments from US investors.
The Bank of Japan raised its interest rate to 0.5% which is the highest in years, but is still very low. This isn't what a country that's getting into trouble due to excessive borrowing looks like.
Japan started running into serious issues with imports last year, and their difficulties will likely continue with their population curve and voter demographics. The strengthening US economy has...
Japan started running into serious issues with imports last year, and their difficulties will likely continue with their population curve and voter demographics.
The strengthening US economy has massive leverage over Japanese budgets and exchange rates because of their huge amounts of debt. Their central bank has very limited leverage to avoid a currency crisis because of their debt rates which is a large part of why we've seen spiraling exchange rates. This is the mainstream consensus amongst economists as far as I know.
National debt is always a controversial topic for economists, and this just seems like a standard MMT (Modern Monetary Theory) opinion.
I haven’t studied any economics, but there are a few concerns I have that seem to be unaddressed.
If governments fund by printing, the type of spending seems to be important. For example, if governments fund tax cuts on the wealthy by printing, I imagine this would effectively act as a regressive tax via inflation. Especially on asset prices like housing.
If governments fund with bonds, bond ownership seems very important. For example, if a government’s debt is primarily owned by foreign entities, this should theoretically siphon money away from the country’s economy in the long-term. I know Japan’s excessive debt is causing their currency to weaken, but I don’t know what the long-term impacts of that are.
It doesn't look like there's any consensus that the yen's decline has much to do with Japan's government debt? The articles I've seen (from May) blamed it on a strengthening US economy, which would tend to reduce demand for Yen-denominated investments from US investors.
The Bank of Japan raised its interest rate to 0.5% which is the highest in years, but is still very low. This isn't what a country that's getting into trouble due to excessive borrowing looks like.
Japan started running into serious issues with imports last year, and their difficulties will likely continue with their population curve and voter demographics.
The strengthening US economy has massive leverage over Japanese budgets and exchange rates because of their huge amounts of debt. Their central bank has very limited leverage to avoid a currency crisis because of their debt rates which is a large part of why we've seen spiraling exchange rates. This is the mainstream consensus amongst economists as far as I know.
Couple references:
The author lives and works in the UK.