【硬核】一口气了解国债，这么一直借下去真的可以么？

Summary

The video discusses government debt - the trend of rising debt levels globally and reasons governments borrow money. It covers debt ceilings, fiscal deficits, economic theories supporting government spending, internal vs external debt, factors limiting debt issuance like interest rates and inflation, and options when debt gets too high like austerity, default or 'dragging it'.

Takeaways

• 😀Governments borrow money to fund deficits caused by higher spending than tax revenue
• 😮Government debt levels relative to GDP have been rising steadily in major economies
• 🤔There are debates on whether governments should borrow more based on modern monetary theory
• 😲High government debt can raise interest rates and hurt the economy if uncontrolled
• 📉Quantitative easing helps lower interest rates so debt costs stay manageable
• 😠High inflation is the biggest threat that can force spending cuts to control debt
• 👍🏻Low interest rates and inflation allow more borrowing without economic pain
• 😥Austerity, default or money printing are ways to address high debt issues
• 🤨Countries often just delay the pain by borrowing more to pay off old debt
• 😫Voters make long-term austerity hard so governments keep borrowing

Q & A

What was the main factor that caused the Great Depression and led economists to rethink the role of government in the economy?

The inaction of the US government and its refusal to intervene during the economic downturn was seen as a key factor in the Great Depression lasting over a decade. This led economists like John Maynard Keynes to argue that governments should take an active role, especially during economic crises.

How does increasing government debt raise interest rates across the economy?

Issuing more government bonds increases the supply, lowering bond prices and causing interest rates to rise. Since government bond rates determine the risk-free rate, interest rates across the wider economy also increase.

What is the difference between internal and external debt for a government?

Internal debt is borrowed domestically using bonds denominated in local currency. This gives more flexibility as debt can be monetized. External debt is borrowed from foreign creditors in foreign currencies, increasing vulnerability to default.

How does quantitative easing help governments take on more debt?

Central banks use QE to buy bonds and lower long-term rates. This reduces the interest cost of new debt, allowing governments to borrow more without rate spikes.

Why is inflation the limiting factor for government borrowing and spending?

When inflation gets out of control due to excessive spending, central banks lose their ability to lower rates artificially. The only solution left is austerity measures to suppress inflation and growth.

What are the three main options governments have when they issue too much debt?

When debt gets too high, governments can (1) implement austerity by cutting spending (2) default on the debt or (3) 'drag it' by borrowing more to pay off old debt.

How does the US debt ceiling provide political leverage rather than restrict spending?

The debt limit has been constantly raised, showing it doesn't really restrict government borrowing. However it does give parties political leverage during negotiations.

Why do most governments choose to 'drag' high debt rather than impose austerity or default?

Dragging debt by borrowing more is politically easier as it avoids painful short-term consequences of austerity or default. But it fails to address the underlying debt problem.

How did quantitative easing allow Japan to increase its debt level substantially?

Japan used QE to artificially suppress bond yields, reducing the interest cost of debt. This allowed the government to take on more and more debt without rate spikes.

What parallels can be drawn between the US debt situation today compared to Japan's in recent years?

Like Japan, US debt is high but interest rates were low pre-pandemic due to QE policies. However, with inflation and rates now rising, US debt capacity may face issues like Japan did before Abenomics.