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Friday, February 15, 2013

On Debt and ...er! Multipliers

I came across posts by  Nick HubbleKeith Fitz-Gerald, and James McKeigue on the subject of Sovereign Debt with some interesting points... P.Krugman is accused of being a flat-earther!
The basic idea is that Debt (1) is a problem and (2) has to be repaid someday.

Of course (2) is not an iron-rule. Debt may never be repaid as long as (a) it is being serviced without "pain", i.e. not holding back economic growth, and (b) the markets deem it as sustainable and it is recycled ad infinitum,

The case of Greece is one where neither (a) nor (b) held.

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