I know people these days are complaining about high government debt loads now due to high-ish interest rates, but those are the same people who complained about high corporate/personal debt loads during near-zero interest rates. This shift is not coincidence as banks charge the rate the Feds are offerring plus an appropriate bonus based on the risk. Ergo when the Feds raise rates the risk load in the economy simply shifts from the private sector to the public sector. By extension it could be said that ultimately interest rates and average/public debt loads do not matter simply because the economy is going to tollerate whatever amount of risk that it wants and there's nothing anyone can do about it.
It is likewise important to remember that borrowed money is far from the only risk around because of operational risk. Most loans ultimately go to relatively safe ventures like buying a house or building a factory. I won't name any names, but there are developed nations with high debt loads considered safe while there are third world states with state-run piracy that are considered risky with miniscule debt loads. All that said, why should anyone care whether risk is carried by governments or corporations?
Submitted December 31, 2023 at 11:50PM by AMountainofMadness https://ift.tt/NgB9cAw
