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SVTPerformance's Chain of Restaurants
Road Side Pub
FCA to sell to Chinese company?
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<blockquote data-quote="VRYALT3R3D" data-source="post: 15678459" data-attributes="member: 131770"><p>Sure.</p><p></p><p>The US government technically doesn't have an obligation to pay off its debt. The government technically "lives forever," so it doesn't have to repay the debt in full or even at all. The US government repays maturing bonds by issuing and selling new bonds. Furthermore, if no one in the future buys that debt, the central bank will. If foreign countries don't buy the debt either, the dollar depreciates. To that end, the government still doesn't have an obligation to repay its debt. That being said, discretionary fiscal policy i.e. inflationary bias increases due to high debt. Although there may be higher taxes to be remitted, the principle still doesn't have to be repaid and only the current interest does. When there is an increase in inflation, the debtors gain. So the federal reserve has some aversion to inflation and inflationary bias depends on that. The costs of government debt depends on the GDP-Debt ratio. If the debt is growing at the same rate as GDP, the tax rate shouldn't be raised(although it tends to be.)</p></blockquote><p></p>
[QUOTE="VRYALT3R3D, post: 15678459, member: 131770"] Sure. The US government technically doesn't have an obligation to pay off its debt. The government technically "lives forever," so it doesn't have to repay the debt in full or even at all. The US government repays maturing bonds by issuing and selling new bonds. Furthermore, if no one in the future buys that debt, the central bank will. If foreign countries don't buy the debt either, the dollar depreciates. To that end, the government still doesn't have an obligation to repay its debt. That being said, discretionary fiscal policy i.e. inflationary bias increases due to high debt. Although there may be higher taxes to be remitted, the principle still doesn't have to be repaid and only the current interest does. When there is an increase in inflation, the debtors gain. So the federal reserve has some aversion to inflation and inflationary bias depends on that. The costs of government debt depends on the GDP-Debt ratio. If the debt is growing at the same rate as GDP, the tax rate shouldn't be raised(although it tends to be.) [/QUOTE]
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SVTPerformance's Chain of Restaurants
Road Side Pub
FCA to sell to Chinese company?
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