Comment 72472

By ScreamingViking (registered) | Posted December 21, 2011 at 23:26:10 in reply to Comment 72377

U.S. debt charges in 2000 were 3.64% of GDP. Today, they are down to 2.79%.

Today, more debt is held by foreigners than in 2000.

So, if the trend continues, then more foreign held debt will likely be a good thing.

If the correlation actually means something. Debt charges have been down because interest rates have been so low, not because foreign debt holdings are higher.

I guess I'm just recalling the inflationary issues of the early-80s - I was too young to understand what was going on, but the battle to keep inflation in check was fought with high interest rates (very high) which did a lot of damage to the economy and caused much grief to consumers, especially mortgage holders. Central banks are afraid to raise rates now because of weak economic growth, but they may have no choice if inflation becomes stronger. Things are different today no doubt, but old lessons seem easily forgotten.

I do not believe you can "mint" your way out of fiscal straightjackets. Debt does matter. Surely there is a balance to aim for, but I think our government is far from achieving it, even if we're closer than many other countries.

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