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We'll, if they inflate enough they can pay it back in nominal terms, right?
you joke, but in theory the Treasury could just print its own money and pay off the debt with that. (I mean that is sorta its primary job)
Its an interesting conundrum - that not many publicly talk about....but has the balance of power shifted between Govt and Federal Reserve?
Meaning that Congress has so forced the Fed to be complicit in its horrible fiscal policy, that its resulted in putting the Fed in a position where it may get rug pulled simply because its become mathematically impossible to pay back the debt.
Any attempts the Fed now makes to reduce fiscal insanity (by raising rates) only exasperates the problem....instead of high interest making gov borrow less, it makes them borrow more to service the high interest debt payment....
The old adage of "if you owe the bank a million bucks the bank owns you, but if you owe the bank a billion bucks, you own the bank" comes to mind.
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I heard that adage initially as "If you owe the bank $10,000, that's your problem. If you owe the bank $10,000,000, that's the bank's problem."
Aside from the phrasing difference, it's interesting to watch inflation update our adages.
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Yes, but "enough" is a catastrophic amount of inflation. Jane Johnson didn't get into the details in this video or in the article, but she brought up that she had started penciling out how much inflation would be required.
The takeaway is that regardless of the approach, this is a preposterous amount of debt with no feasible prospect of repayment.
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No doubt. I was half kidding, but I'm sure it has occurred to a few policy makers.
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I think the strategy will just be to attempt to "manage" debt service, until we hit some breaking point.
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