Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Joseph Silent who wrote (145317)	1/11/2019 10:14:08 AM
From: Horgad	2 Recommendations Recommended By Arran Yuan Joseph Silent Read Replies (2) \| Respond to of 217677

As a starting point, historically, countries borrowing from other countries get in trouble about the time that their debt to GDP exceeds 90%. At that level of debt, there is almost a drag on growth, reduced growth makes it harder to pay back the debt, difficulty in making payments causes credit ratings to go down and interest rates go up, and a downward spiral ensues. Countries that borrow mainly in their own currencies (like the US) are a different story. Since the debt is denominated in their own currency, they can pay it back by increasing their money supply. This works until it doesn't and at some point a currency confidence crisis ultimately ensues. These cases seem more or less impossible to predict by looking at just debt levels (see Japan in the link for example). By this metric, the current state of many of the world's economies is not looking healthy: tradingeconomics.com

To: Joseph Silent who wrote (145317)	1/11/2019 11:20:14 AM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 217677

Joseph, you received an adequate answer from Horgad. The underlying strength of a currency and a country debt is the perception of those lending the money about the ability of the respective country to pay back its debt. It is mostly based on credibility and nothing else when the debt to GDP crosses the threshold limit that some put it at 100% Many years ago we had on SI a discussion related to what best reflects a store of value. Something that is unaffected by debt. Many promoted precious metals which I personally dismiss as you cannot eat it or transact it and the value is a perceived value. What you mention in your question is basically what will be the perception of the market participants that China will pay its debt back or the US will pay its debt back as is the case with Japan or Italy. It is all perception of value and ability to get your money back at the same relative value.

To: Joseph Silent who wrote (145317)	1/12/2019 8:02:36 AM
From: Cogito Ergo Sum	Read Replies (1) \| Respond to of 217677

So US debt and deficit go unnoticed ? It's like US analysts going on about zombie companies in China.. China is addressing these.. However to simply shut them all down throwing MILLIONS possibly out of work in one fell swoop would be worse than reckless.. All the commentators have agendas they do not speak about.

To: Joseph Silent who wrote (145317)	1/12/2019 4:40:26 PM
From: THE ANT	Read Replies (2) \| Respond to of 217677

US debt is in the US dollar which is the world reserve currency. This debt can be paid off at any time by printing dollars. The only potential bad outcome is inflation should we print ourselves out of our debt. No one knows what level of printing it will take to create inflation. My guess is at least trillions and trillions of dollars. I am not sure why anyones guess would be better than mine Like the Fed weAre all data dependent. When we reach inflation wake me up. In regards to this magical number of debt to GDP of 100% This is meaningless as it applies to countries who do not hold the reserve currency. Since only one country holds the reserve currency why should we expect this 100% figure to apply to the US? Read Cullen Roach and MMT theory and Warren Mosler China on the other hand not having the reserve currency must worry about printing causing a fall of their currency relative to the reserve currency. Not only will the fall of their currency Inflame tension with their trading partners but it will make their dollar debt more expensive to service To understand China read a lot of Michael Petis carnegieendowment.org