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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 378.35+2.7%Nov 10 4:00 PM EST

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To: THE ANT who wrote (61214)2/16/2010 2:46:29 PM
From: elmatador  Read Replies (2) of 217661
 
how might the debt/GDP ratio be reduced? There are four basic mechanisms. First, GDP can grow rapidly enough to reduce the ratio. This scenario requires a robust economic recovery from the financial crisis.

Second, inflation can rise, eroding the real value of the debt held by creditors and the effective debt ratio. With foreign creditors holding a significant share of the dollar-denominated
U.S. Federal debt, they will share the burden of any higher U.S. inflation along with domestic creditors.


Third, the government can use tax revenue to redeem some of the debt.

Fourth, the government can default on some of its debt obligations.

nber.org
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