Questions tagged [government-debt]

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50 views

Shouldn't the total global debt amount to zero and not $253 trillion?

In Jan 2020, the Institute of International Finance (IIF) came out with a report (read summary here) that the total global debt is expected to climb to a new all-time high of more than $257 trillion ...
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29 views

Dynamic of 10 year UST given supply shock of the bonds that the FED will buy into

It looks like the US government are gonna issue a lot of bonds in the near future. Basic demand/supply implies that this will lower the price of those bonds i.e higher yields. At the same time it ...
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22 views

Won't countries be in trouble if all sovereign debtors demand payment?

I'm trying to understand this r/explainlikeimfive analogy. I rectified typos, and simplified some names and numbers. Won't Cal demand his principal back at some time in the future? Similarly, won'...
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25 views

How did the massive flight to long-term bonds create a liquidity crisis?

A few weeks ago I noticed that several blogs and such were adamantly proposing that the Fed lower rates immediately by 50 bps. They said that the flight to safety -- to long-term government bonds -- ...
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Is there a reference that plots different countries' debt-to-GDP ratios over (long) times?

This old blog post has an interesting plot that demonstrates that the U.K.'s current debt-to-GDP ratio is significantly below its very-long-term (180-year) average. Is there a plot anywhere that ...
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1answer
50 views

Why do Eurozone members have a commonly higher Debt-to-GDP ratio?

As you could find out from the map, among 22 countries whose debt-to-gdp ratio is above 50%, only 7 are not Eurozone members, and from which only UK is comparably large economical entity. ...
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1answer
130 views

Most significant factors in the price of a goverments bonds

As a follow up on Long-,short-term interest rates and inflation. Inflation is clearly a factor(tho not possible to model mathematically) when it comes to the market price of a bond. I can think of ...
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86 views

Why does the United States' national debt matter?

This might sound like a naive question, but I mean it quite honestly (please be aware that I am merely a high school student): Why does the United States' government debt matter? To be sure, based on ...
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98 views

What would happen to US economy before US government lose control over its national debt?

From this wiki page we can clearly see that US national debt is growing steadily after 2010 and now it's larger than US GDP already (at the end of 2019). Still it's commonly believed the debt is ...
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14 views

How would M2 and Velocity of M2 be affected if balance sheet expansion continues long-term?

Let’s assume that the Federal Reserve does NOT discontinue injecting liquidity into the Repo market but, instead, continues a long-term policy of continuous and regular liquidity injections. Let’s ...
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33 views

What is the logic behind that one can “grow out of debt” via increase in GDP?

As we all know the US has a big debt and increasing deficits. The head of FED J. Powell commented that the US was on an unsustainable path w.r.t some debt to GDP ratio. A few commentators I listen to ...
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Greece national-accounts : deficit and debt doesn't seem coherent

I wanted to have a look at Greek's data to have an idea of the debt crisis' impact on various indicators. Two of those indicators are national debt levels (in GDP% or in absolute value) and ...
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Spending despite fiscal deficit

This is going to be a rather simple question. Surprisingly, I did not find quite a lot of answers satisfactorily explaining my point. The question goes like this- The USA, under the Trump regime, ...
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1answer
16 views

Does Medicaid or Medicare represent a higher risk to the Federal Government Solvency and Debt going forward?

I'm trying to understand not only which program is expected to be larger in terms of costs, but which one has the least capacity to adjust (reduce benefits if revenues for the program fall).
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Would deflation further stress the Federal Government's Balance Sheet? Would this put in peril Debt payments and Social Security benefits?

I would like to know if deflation would represent a risk to Debt (bond) payments and Social Security benefits. To my understanding, Social Security is only indexed when there is positive inflation. ...
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52 views

Is there a country in the world not in debt?

This morning I read the following article: https://www.bbc.co.uk/news/business-49961301 It got me thinking, is there any country in the world not in debt? I am aware that debt is good for a country,...
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28 views

What impact does deficit spending have on economic inequality?

Taxation schemes can be classified as progressive (the tax rate is higher for higher income brackets), regressive (the tax rate is lower for higher income brackets), or neutral (the tax rate is the ...
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What is the privilege of a primary dealer?

Primary dealers have a privileged position, so there is value in being registered as a primary dealer. - https://economics.stackexchange.com/a/13450/8387 I was previously under the assumption that ...
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27 views

Local vs. foreign currency denomination for Emerging Market Bonds

For emerging market governments, why is it safer to issue bonds in local currencies than in foreign currencies to raise money? Given that both are invested in by foreign investors, couldn't both ...
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41 views

Debt Held By The Public

Following off the back of this question on debt-to-GDP vs. debt held by public-to-GDP - Difference between "Debt Held by the Public" and "Total Public Debt Outstanding"?: So in ...
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1answer
85 views

Why does the inverted yield curve occur with US Treasury securities?

I have always thought that US securities were considered nearly risk free as the government will almost always pay them back. So why is it the case that investors currently view short term securities ...
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2answers
74 views

When the Central Bank sells a bond, where does the money go ultimately?

As the accepted answer points out, the premise of my question was flawed. Thank you for the dispelling of my wrong assumptions. The original question follows. There are two related questions (and ...
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42 views

Why does the US have public debt if they make more than that annually?

Probably a dumb question: I know next to nothing about economics and I'm just trying to make sense of what I'm trying to learn. So, I've been looking into GDP lately, trying to understand what it ...
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118 views

Why don't governments exploit negative interest rates more than they currently do?

At the moment many governments, such as Finland's, are able to borrow money at negative interest rates. My question is: why don't they borrow as much money as possible while interest rates are ...
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71 views

Why does a weaker currency make sovereign debt cheaper?

Investopedia tells me that a weaker currency will reduce sovereign debt burdens. It is quoted as saying 'a weaker currency makes [these] payments effectively less expensive over time.' However, I ...
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How can a country grow with so much debt?

I was going through the Indian budget (Indiabudget.gov.in), and I noticed something very strange. The overall liability of the govt was many times more than the revenue estimated in the budget. How ...
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46 views

How does a govt surplus increases investment?

From the closed economy equilibrium condition $I = S + (T - G)$, how does exactly a surplus (which I assume would be used for paying debt) increases investment in the same amount? I ask that because ...
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123 views

Why is the USA not capable to pay its debt?

Why is the USA not capable to pay its public debt on its own? The country needs to create new debt in order to pay its due debt. Not only that, but the debt is also only increasing and the country ...
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The Relationship Between Public and Private Debt

In this video, David Graeber says that if the public sector goes into a surplus, then the private sector must go into a deficit, in equivalent proportion. Is this true? Wouldn't this be complicated by ...
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45 views

What would happen if a country defaulted on its public debt?

Could someone explain in full detail to someone that does not understand much what would happen if a country refused to pay its pubic debt? Someone told me if this happens banks would fall and ...
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28 views

Tax Cuts Affect on Economy?

If we look at the equation for national Savings = S(priv) + S(pub) = [Y-C+Tran-T] + [T-G-Tran] = Y - C - G . We see that Tax falls out of the equation. Therefore, does that mean changes in taxation ...
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1answer
49 views

Repudiate enemy country's holdings of our government's debt [closed]

The Chinese central bank for example holds over $1T in US Treasuries. In the event of a war between China and the US, could the US simply repudiate this debt? What would be the consequences of such ...
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4answers
194 views

When a central bank buys government securities, is this exactly equivalent to printing money?

When a country's central bank buys that same country's government securities, is this exactly equivalent to printing money? There seems to be no agreement on this. Federal Reserve FAQ: Is the ...
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405 views

General government debt vs central government debt?

The IMF's Global Debt Database (Excel, Stata) lists data for: General government debt (GG); and Central government debt (CG). What are the conceptual differences between these two items? For ...
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1answer
78 views

Debt-to-GDP ratio in connection to inflation

On this segment of the Tucker Carlson show, interviewing Robert Hockett, as an advisor to Rep. Octavio-Cortez on the proposed Green New Deal, the following interchange ensues: Tucker: "On the low ...
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37 views

Can a government invest in public companies so their dividends can finance the government

Is it possible that a country could use the money in its sovereign wealth fund to invest in different country's Stock Market and use the dividends to finance its government thus increasing spending ...
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1answer
34 views

Can debt to GDP ratio be reduced transfering debt to local autorities?

It is my understanding that not only government but also local authorities issue bonds. This answer on Money and Finance Stack Exchange suggests that such debts are not accounted in the computation of ...
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135 views

Is debt servicing in the structural or cyclical budget balance?

Are the interest payments on government debt to be considered in the structural or the cyclical budget balance? I think, since it's independent on the state of the economy, then they should go to the ...
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1answer
51 views

Does the Italian national debt really go all the way back to Mussolini's excessive prewar spending?

The WWI & WWII debt is quite well defined in the UK for example and quite shocking how many years it took to pay off. Somebody told me that the Italian debt crisis really goes all the way back ...
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Why is the ten year interest rate lower for Spain/UK bonds than for US?

Take a look at the government bonds interest rates, https://www.marketwatch.com/. For the US is 2.9, and for Spain and UK are 1.5 and 1.1 respectively. Spain is an economy with high unemployment, a ...
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189 views

Evolution of GDP to debt ratio

Is it possible for an entity (say a state, e.g. USA) to keep a constant GDP/debt ratio with a monotonically increasing debt. I should probably mention that I am not an economist (physics and c.s ...
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69 views

Why do we say the US is in debt to China?

Apple import iPhones manufactured by factories in China. Apple has to pay for these Chinese manufacturers. So, Apple should be in debt with Chinese manufacturers. But why do we say the US government ...
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1answer
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Where can I get national debt data?

I'm trying to find out about the history of South Africa's government debt. However, I couldn't manage to find suitable literature or websites showing the history. It is also very difficult to find ...
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53 views

Why can't countries immediately stop the deficit?

Governments often say things like "we will reduce the deficit by 2025". Why can't they simply eliminate the deficit immediately by spending less than the taxes they receive? Surely if a country is ...
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1answer
67 views

Relevance of government liabilities to GDP

After Malaysia's national debt was [reassessed][1], its totaled $250bn along with other government liabilities. Now, I'm having trouble understanding the direct relevance of the ratio of goverment ...
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39 views

What portion of our annual deficit is financed by bonds?

What portion of our annual deficit is financed by bonds? Compared to say, treasury notes (such as checks and printed currency), or private lending?
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Relation between growth rate of GDP and real interest rate for sustainable debt-to-GDP ratio

Why is the relation between the growth rate of GDP and the real interest rate important for sustaining the government the debt-to-GDP ratio ?
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62 views

Electric Vehicle effects on family and macro-economics?

What happens economically when cars last 1000,000 miles on cheap local energy? EV's can save an average family 2000 dollars a year on energy costs, and 2000 per year on automotive investment. That'...
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3answers
638 views

Why is national debt bad if the central bank can keep buying bonds?

When I read about national debt, it's usually about how debt is bad because with too much debt, debtors would demand higher interest rates. Eventually the government can't pay the interest, defaults, ...
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Malaysia's national debt - who's correct?

Malaysia recently changed governments. The new finance minister claimed the national debt is actually RM1.087 trillion, and that the previous government had understated the national debt by some RM400 ...