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The American Politics thread

Uppercut

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I don't know enough about these things either but my instinct is that the outlook for Japan is not great - looking at the slow death of the 3rd largest economy in the world. And from what I understand, Japan's Government is far more robust and effective at implementing economic strategies than America...yet from what I understand they basically have no way out. On the other hand my other instinct is that it's unsustainable to just expect constant growth of an economy...but then surely that's why you don't take on huge public debt. I dunno, I'm not an economist. But I'm yet to see a properly convincing argument for why public debt is something that you just shouldn't worry about at all. Which seems to be the line from the journalists at the Guardian et al.

One thing is for sure is that public debt crises can and do ruin ordinary people's lives...Greece, Argentina etc etc...It's not like we're talking about Nauru here. People can and do starve.
Theoretically the problem with it is that:

1. People start to think it's unsustainable
2. They start charging the government higher interest rates on its bonds
3. This causes interest rates in the economy to rise, leading to a recession

But the yields on Western government bonds are looooooow, which suggests that we're miles away from the point where this is a valid concern.
 

Spark

Global Moderator
Theoretically the problem with it is that:

1. People start to think it's unsustainable
2. They start charging the government higher interest rates on its bonds
3. This causes interest rates in the economy to rise, leading to a recession

But the yields on Western government bonds are looooooow, which suggests that we're miles away from the point where this is a valid concern.
Also it's especially not particularly applicable for the United States for reasons which don't have a great deal to do with economics.
 

andruid

International Captain
I saw a chart, or was it a video with charts in it, claiming that public debt actually balloons whenever Republicans run the show and has to be sorted out by Democrats.
 

harsh.ag

Hall of Fame Member
Republicans want to cut taxes but are fearful of cutting spending since they may lose votes and Democrats want to increase spending but are fearful of raising taxes

The drawbacks of having high public debt are manifold. The yields being low is not the only factor. The yields being low reflect market expectations of low GDP growth rate for a long time. That in itself means the expansion isn't doing what it was supposedly intended to do.
 

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