tag:blogger.com,1999:blog-2277215496195926573.post2259445384977475272..comments2024-01-01T07:41:51.347-08:00Comments on RALPHONOMICS: What’s the optimum amount of national debt? Ralph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2277215496195926573.post-26330238218904803192015-03-05T06:24:42.731-08:002015-03-05T06:24:42.731-08:00Hi KK,
Good points!Hi KK,<br /><br />Good points!Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-71740837908365622662015-03-05T05:46:07.587-08:002015-03-05T05:46:07.587-08:00Good, but maybe 2 further points are important and...Good, but maybe 2 further points are important and may justify a non-zero national debt.<br /><br />1. Borrowing from foreigners may be essential in a desperate war of survival when domestic resources are almost exhausted c.f. UK in WW2.<br /><br />2 You may have a good case for no more borrowing except in dire emergencies. However this does not justify premature redemption of all historic debt. <br />In the case of the US, UK and other counties whose external debt to foreigners is a large fraction of GDP, rapid redemption would entail large outflows of capital. This would devalue the currency and reduce living standards. Of course, there would be a benefit later on due lower interest payments. Even so, it might be best to simply let inflation slowly erode the burden of interest payments and redemptions of historic debt.KongKinghttps://www.blogger.com/profile/10992633301481631373noreply@blogger.com