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somenameformetoday at 4:42 PM1 replyview on HN

Even if we just ignore inflation and other issues, there's still a hard limit because governments don't literally just print money, but sells bonds at market rates. As confidence in the economic stability declines the interest rates the government is required to offer on those bonds trends upward. So right now even 10 year treasuries are selling with just under 5% interest. As a result we're now paying $1.4 trillion per year in interest alone, and that number is going up far faster than the economy is growing. This [1] graph looks quite disconcerting. And it's a vicious cycle. The less confidence there is in the stability of this game, the more the government will have to pay to sell that debt. And the more they have to pay, the more debt they end up needing.

[1] - https://fred.stlouisfed.org/series/A180RC1A027NBEA


Replies

pydrytoday at 5:55 PM

>governments don't literally just print money, but sells bonds at market rates

no, sometimes they literally do exactly that.

google for quantitative easing. that's what it is and it's a tool that can always be used by monetarily sovereign countries to bring bond interest rates down by as much as they want.

insolvency thus isnt possible.