【硬核】一口气了解国债,这么一直借下去真的可以么?
Summary
TLDR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
😖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?
😊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。
😮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。
🤔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。
😰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。
Mindmap
Keywords
💡政府债务
💡财政赤字
💡债务上限
💡货币理论
💡内部债务
💡利率
💡通货膨胀
💡量化宽松
💡紧缩财政
💡债务违约
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!
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