Timeline for Why is Greece's debt considered a problem but not US debt, which is much larger?
Current License: CC BY-SA 3.0
22 events
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| Jun 21, 2017 at 7:35 | history | edited | Royal Canadian Bandit | CC BY-SA 3.0 |
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| Jun 20, 2017 at 19:19 | comment | added | kleineg | "unless its government chooses to default": if that isn't the scariest phrase ever it should be. | |
| Jun 20, 2017 at 13:31 | comment | added | Steve Jessop | @KABoissonneault: it could be a bad thing or a good thing, but it's good if you assume that the country will do its best to avoid massive inflation. The lender would prefer to be paid in freshly-printed money than to be defaulted on, because 1 post-inflaton dollar is better than 0 pre-inflation dollars. But of course if I'm being paid $1, then all else being equal I'd prefer there to be as few other dollars in the world as possible. So, if the US can't pay me from tax revenue, I want it to print more money as long as the inflation doesn't reduce my other dollar-denominated investments too far. | |
| Jun 20, 2017 at 11:38 | comment | added | Frank Rem | @RoyalCanadianBandit You mention that 'Greece was rescued by an international bailout package'. I believe that not Greece, but the lenders were bailed out. Greece remained in debt. | |
| Jun 20, 2017 at 10:44 | comment | added | Stian | @Carpetsmoker Japan is a special case, because a rather large fraction of Japanese government debt is owned by Japanese either via Bank of Japan (owns about 70%!) or national pension funds. | |
| Jun 20, 2017 at 7:14 | comment | added | MSalters | @PatrickTrentin: Might be a good question on its own, but AFAICT the main variation is whether you count sub-national debt. US states carry a lot of debt. | |
| Jun 20, 2017 at 3:10 | comment | added | WernerCD | @Carpetsmoker It's able to print it's own money, has a better economy, etc... Debt-to-GDP is one metric of many that determines "health" | |
| Jun 19, 2017 at 20:21 | comment | added | user11249 | How would this explain Japan, which has a debt-to-GDP ratio of about 240%? | |
| Jun 19, 2017 at 17:35 | comment | added | ggiaquin16 | @PatrickTrentin, I I found a few links pointing USA at 100-110% debt to gdp. Forbes posted in 2014 we were at 101% and another statistics website had us at 108% in 2016. According to CIA it's at 73%... What is true... who knows... "cia.gov/library/publications/the-world-factbook/rankorder/…" | |
| Jun 19, 2017 at 15:25 | comment | added | Royal Canadian Bandit | @KABoissonneault: Two different types of risk: The USA is at risk of inflation by issuing too much money, whereas Greece is at risk of running out of euros. One is not necessarily "better" than the other. But inflation in the USA is low by historical standards, and increased inflation is not a very serious concern for investors; whereas Greece came very close to literally having no more money, until it was rescued by an international bailout package. | |
| Jun 19, 2017 at 15:18 | comment | added | Dan Is Fiddling By Firelight | @KABoissonneault I don't think it's being called a good thing; just an option. The US could run the printing press and pay off its national debt in cash; at the cost of a surge of massive inflation that'd cause all sorts of followon problems. Greece doesn't have the ability since joining the Euro because it no longer owns its own currency any more. (Other Eurozone members, along with countries that have pegged their currency to a foreign one have the same problem of not being able to control their money supply any longer.) | |
| Jun 19, 2017 at 14:59 | comment | added | KABoissonneault | Why is that last paragraph seen as a good thing? If the reserve issued new dollars to pay its debt, wouldn't the dollars have much less value? | |
| Jun 19, 2017 at 14:25 | comment | added | Jared Smith | @ErwinBolwidt pretty sure that was a rhetorical question. | |
| Jun 19, 2017 at 14:05 | comment | added | Erwin Bolwidt | @mickeyf en.wikipedia.org/wiki/Succession_of_states#Yugoslavia | |
| Jun 19, 2017 at 13:07 | history | edited | Royal Canadian Bandit | CC BY-SA 3.0 |
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| Jun 19, 2017 at 12:52 | comment | added | R.M. | @Bregalad It is the ability of the borrower to pay back the debt, but it's not the ability to fully pay back the debt. -- Paying back the debt you owe to Paul by taking out a new loan from Peter is perfectly acceptable (as far as Paul cares). All you need to do is find enough Peters to take the deal, and come up with enough cash to keep up with the interest. The US has no problems with that, whereas Greece does. Heck, US debt is viewed as safe enough that a large number of Pauls say "don't bother with cash - just pay me my interest with another loan." | |
| Jun 19, 2017 at 12:40 | comment | added | user9422 | Not even countries themselves are immortal. Where is Yugoslavia today? | |
| Jun 19, 2017 at 11:17 | comment | added | Royal Canadian Bandit | @Bregalad: Fair point about ability to pay, I've expanded my answer. As for "paying back the debt" -- unlike private citizens, governments are immortal and never have to pay off their debt in full. All that matters is being able to meet the payment schedule, which the USA can do much more easily than Greece. | |
| Jun 19, 2017 at 11:15 | history | edited | Royal Canadian Bandit | CC BY-SA 3.0 |
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| Jun 19, 2017 at 11:05 | comment | added | Rekesoft | Aside from pure numbers, there is much more confidence in the US ability to repay its debts - the country is the wealthiest in the world, and it has never defaulted - than Greece's. Maybe they are over-confident with this, but that's the current situation. | |
| Jun 19, 2017 at 11:05 | comment | added | Bregalad | But the GDP is created by private businesses while the debt is contracted by the governments - so comparing both doesn't make sense without bringing the taxation method into the equation, does it ? Also the "ability of the borrower to pay back the debt" seems to be close to zero for both cases. | |
| Jun 19, 2017 at 11:00 | history | answered | Royal Canadian Bandit | CC BY-SA 3.0 |