【硬核】一口气了解国债，这么一直借下去真的可以么？

Summary

本视频深入探讨了一个核心话题：政府债务。通过分析过去25年美国、英国、欧元区、中国及债务最高的日本的债务对GDP比率，揭示了政府债务急剧增加的现状及其背后的逻辑。视频还讨论了债务上限、政府收入来源、财政赤字、现代货币理论（MMT）以及债务发行的限制因素，如利率和通货膨胀。通过历史案例，解释了政府如何处理过度借债的问题，包括紧缩政策、债务违约和财政刺激政策。最后，探讨了债务问题的潜在解决方案，旨在帮助观众深入理解宏观经济和各国的财政政策。

Takeaways

• 😀 政府债务与GDP比率不断上升,日本政府债务占GDP的260%,需要18年才能清偿
• 😲 政府通过发行债券来筹集资金弥补赤字,这导致政府债务飙升
• 🤔 凯恩斯主义鼓励政府在经济衰退时增加支出刺激经济,这成为各国政府增加债务的理论依据
• 💰 内部债务与外部债务的区别在于前者可以通过发行货币来偿还,外部债务则面临真正的违约风险
• 🚨 债务上限是美国用于限制政府支出增长的象征性机制,但每年都会调整
• 📉 政府过度发债会抬高利率并压制经济,量化宽松可降低利率缓解这一问题
• 🔥 通货膨胀是政府无法规避的唯一约束,必须采取緊縮财政政策应对
• 😖 面临债务危机时,政府可选择緊縮支出、 default、拖延,但拖延风险最大
• 🤝 中央银行购买政府债券可控制利率,这成为各国应对债务的重要手段
• 💡 政府发债没有绝对标准,取决于当时的经济环境与是否触及利率和通胀的约束

Q & A

为什么政府会持续增加国债?

政府增加国债的主要原因有两个:一是在经济衰退时借钱来刺激经济;二是政府的支出长期超过收入,需要借钱弥补赤字。

Outlines

00:00

😖政府债务现状及美日英等国家债务增长速度

本段介绍了过去25年来美国债务占GDP的比重增长到120%的趋势。英国、欧元区和中国也以极快的速度增加自己国家的政府债务。日本的政府债务最高,达到GDP的260%。这意味着日本每人需要2.6年的收入才能偿还国债。政府疯狂举债的逻辑和后果是什么?

05:00

😊凯恩斯主义-政府可以举债来刺激经济

本段首先介绍了亚当·斯密的看法——政府不应过度干预市场,小政府最好。但随后因经济危机频发而被凯恩斯主义取代,即认为政府可以通过举债来刺激总需求,防止经济危机,尽管这一理论也有争议。最近出现的MMT理论更极端,认为只要不通胀,政府可以无限举债。

10:01

😮政府可以通过与央行合作来减少举债的限制

本段分析了限制政府举债的两个因素:利率和通胀。政府可以通过与央行合作实施量化宽松来抑制利率上升,以减少这些限制。但央行也无能为力面对通胀的问题。历史经验证明,这时唯一的解决方案是采取紧缩措施。

15:02

🤔不同国家的正常债务水平各有区别

本段指出,衡量一国债务是否过高的标准不是绝对数值,而是要考虑该国的经济环境。只要不触及利率大幅上升或通胀失控的底线,高债务也可能不是大问题,如疫情前的美日欧。但现在形势已变。

20:03

😰面对债务问题,政府几乎都会选择拖延

最后一段分析了政府面临债务问题时的三种应对路径:緊缩、违约和拖延。由于拖延在短期代价最小,选民也不会同意前两种激进手段,拖延往往成为政府的首选。

Keywords

💡政府债务

政府债务指一个国家政府所欠下的债务总额。视频讲解了美国、英国、欧元区和日本等主要经济体的政府债务规模,以及政府不断增加债务的原因,如财政赤字、刺激经济等。政府债务过高会导致利率上升、通货膨胀等经济问题。

💡财政赤字

财政赤字指政府的支出超过收入的差额。视频显示主要经济体长期处于财政赤字状态,需要通过发行债券融资弥补,这是政府债务不断增长的主要原因之一。财政赤字可以通过减少支出或增加收入来缩小。

💡债务上限

债务上限是美国等少数国家设立的政府借贷的法定最高限额。视频认为债务上限更像是一个象征性的制度,因为历史上每当接近上限时,国会就会重新调高。超过债务上限将严重损害美国经济,所以实际作用有限。

💡货币理论

货币理论是关于货币供给与经济活动之间关系的经济学理论体系。视频简要介绍了亚当斯密、凯恩斯等主流货币理论,它们是各国政府大举举债并以货币方式刺激经济的理论依据。

💡内部债务

内部债务指政府向本国居民和机构发行的债务。视频分析内部债务与外部债务的区别,前者容易通过货币发行量控制,不易违约,后者则会加剧经济波动。许多历史性债务危机都与外部债务违约有关。

💡利率

利率指借贷资金所收取的价格。视频指出政府债务过多会推高利率,不仅增加本身的借贷成本,也会抑制经济增长。因此利率是限制政府举债的一个关键因素。政府可以通过与中央银行合作实施量化宽松政策来压低利率。

💡通货膨胀

通货膨胀指物价总水平的上升。视频认为通货膨胀是政府无法绕开的“硬约束”,一旦通胀失控,政府只能采取紧缩财政政策应对,这将打击经济。许多政府为避免短期痛苦而延长债务问题。

💡量化宽松

量化宽松指中央银行大规模购买政府债券和其他证券的货币政策。视频解释量化宽松的重要目标是抑制长期利率,这样政府可以更低成本地增加债务融资。日本就是利用量化宽松来控制利率,支持其高额的政府刺激支出。

💡紧缩财政

紧缩财政指政府削减财政开支,减少赤字的财政政策。视频称当政府认识到债务问题后,实施紧缩是最直接有效的应对手段,但需要政府有足够魄力和面对巨大阻力。欧债危机期间,许多国家在被迫实施严格的紧缩政策。

💡债务违约

债务违约指借款国无法按期偿还本金和利息的行为。视频说明现在政府违约不会像公司破产那样失去所有资产,主要后果是国家信用下降,融资成本提高。一些国家也会在外部债务违约的同时,选择违约内部债务。

Highlights

政府借债的理论依据是凯恩斯的理论,政府应该通过借款来刺激需求,避免经济危机

内债与外债的区别在于,内债可以通过发行货币来偿还,外债则面临真正的违约风险

政府债务的两个限制:利率和通胀。利率过高会抑制经济,通胀过高会失控

量化宽松可以降低利率,让政府更容易继续举债

不同国家对政府债务的容忍度不同,关键看利率和通胀是否在可控范围

政府债务过高时有三条路可走:紧缩支出、违约、或拖延

违约会严重打击一个国家的信用,进而影响货币和经济

政府通常会选择拖延偿债,这对短期经济冲击最小

美国的债务上限是一种政治斗争的工具,实际作用不大

现代货币理论认为只要不通胀,政府可以无限量借债

日本政府正在大规模购买国债来压低利率,便于举债

历史上许多国家因为无法偿还外债而违约引发危机

政府开支过高会抬升整个经济的利率水平

通胀是政府无法绕开的约束,必须采取紧缩措施应对

政府举债与GDP比例不是固定标准,关键在于是否影响利率和通胀

Transcripts

Our video today is very hardcore

Let's talk about a topic

that is arguably the centre of the financial universe

Very interesting

and intricate

Very suitable for me to talk about it

That is

Government Debt

This is the trend of the U.S.

debt to GDP over the past 25 years

Now it's over 120%

Britain, the Eurozone and China

at what seems like an incredible speed

increase their own country's government debt

And the most outrageous

the world's most prolific borrower

is Japan

The government debt is the highest in the world at 260% of GDP

What does this number means?

It takes every person in Japan 2.6 years to make

enough money to pay off their national debt

If you look at the revenue of the

Japanese government in 2022

If they don’t eat or drink or spend any money

not even a cent

then it’ll take them 18 years to clear the debt

Have the government of these countries gone crazy

borrowing so much money

What’s the logic behind it?

Will US default on its debt

Why do some economists say

its better for government to borrow more and more money

how much money is considered a lot?

To be honest

when I was crafting the script for this episode

I believe the contents are valuable

I try to

make it easy to understand

If you think this video is useful

You can save it as favourite

This will make your

collection more valuable

Every government makes money

and spends money

This is US government’s income for the past 30 years

95% of them comes from tax

This is their spending

They spend their money on public utilities like

National defence, military, infrastructure, etc

You will find that

most of the time they spend more than they earn

In technical terms, it's called constant budget deficits

Where did the extra money come from?

Government would issue bonds to borrow money from the market

to make up for this part of the funding gap.

You can see the fiscal balance of

China, Japan, UK and Eurozone

they are all in constant deficit

If you just look at this financial situation

if it’s your next door neighbour

then he is probably a prodigal

But that doesn't seem to hold true for a country

Let’s first take a look at

debt ceiling, a topic

heavily debated for past few days

In order to control themselves

so that the government spending won’t go too high

there exist a symbolistic system

called

Debt Ceiling

The congress would vote on deciding the line

The treasury cannot borrow money

beyond this line

This sounds like a reasonable restriction

and self-restrain

But why did I say it’s symbolistic?

Once the debt nears the ceiling

the Congress would immediately held a vote

When it’s getting close, there’ll be a vote

When it’s getting close, there’ll be a vote

So from 1981 till now

In 42 years

the debt ceiling has been adjusted 42 times

On average, it is raised once a year

Actually everyone knows that

if there’s a problem with US debt

like a default

then the blow to the entire U.S. economy would be devastating

White House predicted that

if the default lasts for a few weeks

it would lead to a 45% drop in the U.S. stock market

More than 8 million people would lose their jobs

In short, the consequences are very severe

So this debt ceiling

mainly gives the two parties an opportunity to quarrel

Now Biden’s Democrats is in power

but in Congress

majority is Republicans

So the Speaker of the House, McCarthy

wanted to take this opportunity

to force Biden to reduce financial expenditure

So both sides are negotiating

this financial mechanism

Two years ago when Biden

threw in $5 trillion to stimulate the economy, they didn’t do anything

Now they want to start negotiation when the debt ceiling is close

Actually there aren’t many countries

in the world that has debt ceiling

Other than US, there is Denmark

But Denmark debt ceiling is very high

Three times their current debt

so the debt ceiling is basically just a farce

There is really no country in the world

that restricts its own country's debt issuance

because of debt ceiling

For the past 50 years

Global government debt continues to rise

Why do you think they are borrowing so much?

What are they thinking?

Are they not happy?

Lin is going to

give you a

Economic 101

First we have to understand

what is the problem we are trying to solve

Government borrows money to spend

the problem is why are these governments

spending so much money?

The father of modern economics

the one who introduced

The Invisible Hand, Adam Smith

he actually was very against government spending

He believes that market competition is the most efficient

So the less the government manages, the better.

the smaller the better

If you borrow so much money and spend so much money

it is very irresponsible

US followed his theory

from 18th to 19th centuries.

encouraged competitions

The government would not regulate anything

But slowly the problem arises

he realised that

If the market is completely free to compete

the economy will collapse every once in a while

the economy will collapse every once in a while

The worst was

the Great Depression in 1929

In the face of such a great depression

US government was firmed on their practice

I don't want to intervene too much in the economic cycle

Unexpectedly, this depression lasted for more than a decade

Afterwards, many economists believe that

the reason why this depression can last for so long

is due to government’s inaction.

Under the background of this era

another great economist appeared

John Maynard Keynes

He put forward a set of new theories

adopted by the governments over the world

The most succinct summary is that the market will also fail

so the government cannot ignore completely

especially during economy downturn

People are not willing to spend money

demand is sluggish

So government should borrow money and spend it

to increase aggregate demand

and prevent economic crisis

Of course

Keynes's theory was later disputed

However

Its core has been gradually accepted by governments across the globe

When the economy faces a crisis or recession

The government has to borrow and spend money vigorously

Stimulate the economy

Only in this way the economy can get out of crisis

Did you notice that

whenever there is a crisis

the government will start spending money

US 2008 subprime mortgage crisis

2020 pandemic

1998 Japan financial crisis

2008 subprime mortgage crisis

2011 earthquake

Euro debt crisis

Not sure if it is a coincidence

but lately there are quite a lot of crises

so governments accumulated large amount of debt

But it doesn't mean that

the money spent is useful

For the past 30 years

Japan has been borrowing money

but their GDP

is motionless

What we said just now

is the theoretical basis for government spending

Let’s expand it a little

Recently, this theoretical basis has been upgraded

An economic theory that subverts

previous theory became popular

Modern Monetary Theory (MMT)

The theory believes that

Governments should be able to borrow freely

Because the more the government spends,

the more money the non-government side of the market makes

The government's credit is essentially money

As long as there is no inflation

Then borrow and spend as much as you can

This is the best for the economy

Of course this theory

is not yet accepted by mainstream economics

but it really is very popular these days

that’s why I mention it

Alright, even if

the government can borrow and spend money

they can promote employment, stimulate economy

Could they be borrowing and spending

money endlessly

This definitely doesn’t sound reasonable

There must be a limit

However the limit

is definitely different for people like us

Because government possess capability

that we do not have

and that is printing money

Some might disagree

Lin you’re wrong

How could government print money

Only central bank can print money, government can only borrow

That’s right, theoretically that’s how it should be

Most of the well-established systems

also separates the government from the central bank.

The government can't simply print money

from the central bank and spend it

But actually, there are ways

the government can work around it

The simplest one would be

the central bank cannot print money and give it to government

but it can buy government bond right

Isn't this what Quantitative Easing does?

Essentially it is government borrowing money from central bank

This is actually the difference between domestic debt and foreign debt

The one we mentioned

A country's using bond issued locally

is internal debt

Maybe back in the days of using gold standard

it is restrictive for government

they wouldn’t dare to print money without limit

But now

it is easier for government to evade

default by printing money

Money borrowed overseas

are usually debt denominated in USD

and this is external debt

No one can print money other than US

If you really have a cash flow problem

you can only borrow from others

This is the time

when it's very vulnerable to default

If we say that

internal debt is a buffer period for economic activities

Then external debt

is amplifier of economic activity

It’s easy to understand

because debt itself is leverage

When the economy is good

the capitals would all come to you

then you can magnify your advantages

then you can magnify your advantages

but once there’s a problem

and the capitals withdraw

it’ll exacerbate the crash

Actually throughout history

many national level economic crash

debt crises

are mainly due to default on external debt

In the 1970s and 1980s

Latin America was growing fast

and attracted a lot of external investment

Two oil crises in the 1980s

USD raised interest rates

Latin America had to follow suit

causing their debt grew further

External debt was increasing

In the end, Argentina, Brazil, Mexico

all defaulted on their debt

The American investors lost their money, too

Euro debt crisis

lasted for so long

is because Eurozone

in my opinion is a bit troublesome

Before this, I’ve mentioned in

Greece and Euro debt crises videos

In the beginning these European countries

all huddled together and

created a central bank to print money

but their fiscal policy is a separate business

This is turning internal debt

into external debt

But Greece, Italy and Spain

were facing a problem

Their national debt is at risk of default

European Central Bank

can’t break the rule

can’t break the rule

right

So they can only borrow money from others

EU and IMF lent money to them

but they are also forcing them to tighten up expenditure

This caused further problems for these countries

Their economy was already weak

and now they had to tighten up

This fiscal policy was supposed to be

an economic regulator, but instead it

increased economic fluctuations

This is the problem with external debt

1997 Asia Financial Crisis

1998 Russia and Ukraine default

2001 Argentina Financial Crisis

including last year’s Sri Lanka

The direct reason for their crash

is because default on external debt

This is why some people said internal debt isn’t debt

Although this theory is a bit extreme

internal debt is certainly a debt

but it's much more controllable

Governments can borrow more comfortably

in an emergency without worrying

about short-term defaults

So looking from this point

US has their particularity

They don’t have to worry about internal or external debt

for them it is all internal debt

The dollar, of course, is another topic

Alright just now we talked about

the government borrows money differently than we do

It's not money or the debt ceiling

that restricts government borrowing

So what exactly is restricting it?

Lin dive deep and found that

The biggest debt crises in history

can be summed up in two ways

First is interest rate

Interest rates are at the heart of financial markets

and national debt is the core of the interest rate

because its price determines the risk-free rate

You will find that bond issued by companies

for example Microsoft, Amazon, Petrochina

their interest rate is highly related

to government bond rate

because its pricing is determined by the interest rate of government bond

If more government bonds are issued

the supply will increase, the price will drop

and the corresponding risk-free interest rate will rise

Interest rates across the economy will rise accordingly

The effect is almost the same as raising interest rates.

What’s the effect of raising interest rates?

I believe everyone would have some understanding on this

and that is suppress consumption, suppress investment

suppress economy, suppress everything

Maybe it confuses you a bit

Isn't the rate hike controlled by the central bank?

how is it related to national debt again?

We have talked about this in previous episode

To put it simply

Central banks control short-term interest rates

National debt control long-term interest rates

In addition to suppressing the economy

the rise in interest rates has a more direct consequence for the government

The cost of issuing debt

simply goes up

If they want to take new debt

they’ll have to pay higher interest

It’s like if you get into more car accidents

then the insurance become more expensive

Too much government debt raises interest rates

If the rate is too high to a point

that the tax received is insufficient to pay for interest

how can they stimulates economy

don’t bother think about it

The government will become

a fund that provides

fixed income to global creditors

They’ll get into a spiral of debt

uncontrollable, borrow more and more

This idea is

not extreme at all

For example, Japan's debt

If the average government interest rates

is as high as 5%

Then all the government revenue

is not enough to pay the interest.

Of course, this is not the case in Japan.

Although their debt is the highest in the world

but their current fiscal revenue is only 11%

they spent it mostly on interest rate

For the past few years

although they are borrowing more

but the interest paid is less

This is because government has a way

to counter the rise of interest rate

All the things we’ve talked about is slowly connecting

This method is Quantitative Easing

Since 2013, Japan has been

following Abenomics

and borrowing a lot to stimulate economy

But he was worried about borrowing too much

causing a rise in interest rates

The central bank is responsible for printing money to buy government bonds

Once demand increase

price increase, then the interest rate can be lowered

It's better to get it down to almost zero

After that, the government

can borrow money comfortably

without worrying interest rate hike

Until 2020

Japan government couldn’t be bothered to pretend

They laid it all out

They just want to do unlimited QE

Their goal is in the open

and that is to push down 10 years yield

to below 0.25%

After battling with capitals in the market

it has been increased to 0.5%

still there’s a limit

After 2013

Japan's central bank holdings of government bonds risen

because the central bank continues to buy government bonds

to push down interest rate

This allow Japanese government

to pay lesser interest

despite borrowing more money

Don't think that central banks are printing money

purely to put a little more money in the economy

It has a

very important target

and that is to lower long-term interest rate

Not only in Japan, QE in US, Europe

produced the same results

Every time someone questions whether

the U.S. Treasury is borrowing too much

Treasury Secretary Janet Yellen

will come out and say

although we borrowed a lot

but the interest rate is very low

The interest rate we pay now

is not as high as it was in the 90s

The implication is that

Borrowing is cheap and it helps stimulate the economy

then why wouldn’t I borrow?

So you see

the first restriction on borrowing, interest rate

can be lowered through

cooperation between

government and central bank

But there’s no free meal in the world

There is one restriction

which the government cannot get around

The one topic that concerns

governments, central banks and economists

and that is inflation

We have published videos

for these two topics respectively

Inflation

is the one matter that troubles many governments

They can use money to pull demand

They can use money to stimulate employment

But when it comes to inflation, there’s not much they can do

Other economic problems now seem trivial

Central bank can no longer suppress interest rate artificially

nor use smart-ass policy to curb

Countless historical experiences have shown that

the only solution is taking austerity measures

This is akin to chemotherapy

Kill all the cells

both good and bad

Cooling prices by suppressing the overall economy

There are some governments who

couldn’t go through with it

so they continue to borrow and stimulate economy

This risk them falling into hyperinflation

Venezuela was in that position few years ago

You must be wondering

now that US inflation is so high

why are they still increasing debt ceiling?

This is because

they have spent all the money, there’s no other way

If the US government knew that

the stimulation in 2021

would bring such high inflation,

The Fed raising interest rates frantically, and the global economy in recession

they wouldn’t dare spending so much money

Now that you have an understanding on the two restrictions

now let’s take a look at how much bond issued

is good for some countries

or is considered normal

As long as they don’t touch on these two restrictions

Issuing bonds is about

trade-off between

growth and stability

They can have different strategy

or different style

Some countries which are relatively stable

like Denmark

even though they have debt ceiling, but it’s not useful

Debt to GDP ratio

has been below 50%

Countries like Sweden, Netherland, Switzerland

are similar

They don’t pursue high economic growth

they do it step by step

US and Japan are both pursuing rapid growth

China has different system

the central is quite stable

but for local bond or municipal bond

then there are more problems to that

Anyway, no matter how much debt a country chooses to issue

these two are the bottom lines

If they issued too much causing a hike in interest rate

or suppress economy or unable to repay

or they issued too much until there’s a rise in inflation

then there’s a risk of losing control

At this time the government debt is definitely too high

So the red line for debt

is not an absolute number

nor is it an absolute ratio to GDP

It is based on

the economic environment of the country

If interest rate and inflation is low

and people have confidence towards government

Even if you keep borrowing

and the number may seems too big

but it could be nothing for the economy

Before pandemic, that’s how it is for

US, Japan and Europe

Even if Japan’s debt is so high

only the media would make some noise

The financial market is still relatively stable

but the environment is different now

Let’s look at the interest rate on ten-year US Treasury bonds

3 years ago was 0.6, now is 3.7

Inflation is even higher

3 years ago inflation was 0

now is 4.9

Not only US

it’s similar in Japan and Europe

So you see

Japan's 260% debt ratio

Two years ago it didn’t look so high

but now it poses a problem

If one day UK government realised that

they issued too much government bond, inflation is rising

the road is getting narrow

What can they do?

Then the choice will definitely not be so easy.

There are three roads ahead

First

the more direct way

austerity

You borrow too much

so spend less and borrow less

Simple as that

For example US government

Often because the budget is not approved

they had to shut down for few days or few weeks

In 2009

they shut down for the longest time in history

35 days

Across US, more than 800,000 civil servants

had not been paid for more than a month

This kind of small scale austerity

can't solve the problem at all

Large scale intense austerity will

definitely bring an immediate hit to the economy.

So governments need a lot of courage

to implement this kind of policy

They will also face strong resistance

when implementing the policy

800,000 people didn’t receive wages

They wouldn’t take such drastic measure

if they had not been forced to a certain degree

Like Europe debt crisis

Italy, Greece, Spain

always these countries

In 1997

Asia Financial Crisis, Korea

they all implemented very strict austerity policy

to solve debt issue

Do you think they have self-conscious?

Of course not

This is because they have external debt

They had to borrow from IMF

The creditors must have forced them to retrench

In the face of debt problem

there’s a second road

This is more radical

and that is by defaulting or debt restructuring

Many of you may not be clear on

what would happen when a country default

Country default

is not the same as how a company default

not as disastrous

selling off all your assets

and dissolve immediately

When government goes bankrupt

investors can’t do much about it

Over a century ago

it was indeed solved by force

When Venezuela went bankrupt in 1902

the creditors, Germany, UK, Italy

dispatched army and blew up the ports

to force Venezuela to pay

But now such thing will not happen

Now when a government default

the biggest consequences is decline in credit

Then the cost of financing will be high

and it will be hard to borrow money

This is a serious case

because now an economic body

is based on credit

The more advanced the economy, the more it depends on credit

Once government default

entire country’s credit market will crash

Everyone would avoid it

Then the currency market will plummet

They would take a really long time

at least 8 to 10 years

to slowly recover

This shows how serious the blow is

The US government predicted that

defaulting on few interest rate terms

would cause 8 million people lose their jobs

However

this doesn’t mean there won’t be a default on internal debt

Lin counted that

from 1980 to 2022

In these 42 years

There are a total of

84 internal defaults around the world

I counted it one by one

What I found

interesting is that

Internal default for larger country is

at the same time with external debt default

For example, Russia in 1998

Argentina in 2001

Greece in 2012

Their main problem

is on external debt

When the government see that

they are defaulting on external debt

their credit will definitely face a huge blow

then might as well default on internal debt

and won’t even have to pay back debt

or print less money

For the past 20 years, Argentina had

bankrupted 3 times

The two roads we mentioned, austerity and default

are not common options

Most government would take this route

I think you know what it is

that is drag it

How do they drag it?

Either by borrowing money to pay back old loan

or simply print money

or both at the same time

Generally when government facing debt problem

it’s when economy is sluggish

accompanied by high inflation

At this time if they

spend money to stimulate

for example stimulate EV industry

and suddenly there’s a technology outburst

that brings about improvement in productivity

Then the economy will be expanded

inflation will be digested by growth

Government finances will stop going downhill

The economic problem is thus easily traversed

But of course

the possibility of this is too low

If they continue to borrow and print money

the most probable outcome is it becoming worse

If they keep dragging

that is certainly irrational

and unreasonable

But this is what most countries

choose to do when facing

debt problem

This doesn’t mean

the government is procrastinating

This is actually due to political system

They are often elected by terms

Even if economists and government official

do not want to drag

but the citizens don’t want to face austerity

and they can’t stand government defaulting

In these 3 solutions

Only dragging is expansive

It’s the least painful in short-term

This kind of policy

is definitely popular amongst the voters

If you watched the episode on Greece

you’d now how undependable voters are

Did you realise

a lot of the topics

are now connected

Today, on the topic of government debt

we talked about US debt ceiling

Why governments borrow money

The difference between internal and external debt

What are the factors limiting debt issuance

What to do when issuing too much debt

Quite hardcore right

For this episode

I spent a lot of time scripting

not a lot of stories told

with the hope of laying

the framework down in one go

and help all of you to understand

more macro economics

and fiscal policies of various countries

To those of you who watched till now

Let me give you a Like and hope you can give me one too!