News for hackers. Stuff that matters.

A comment on India’s banking system is flirting with a Lehman moment. Parent comment

Re:India’s banking system is flirting with a Lehman moment by roenxi on Sunday November 11, 2018 @02:34PM (#18428093)
Yes. But even then it is a bit difficult to speak with certainty because governments choose the tax rate and as long as the army stays intact can recover from nearly anything.

In this context, I believe debt load to GDP for the US after WWII, and that didn't cause a problem. The concern is that the US has a debt load consistent with a world war and conditions that are really quite favorable. So the obvious questions are "at what point does this get paid back?" and "in like-for-like real terms, assuming politicians are cynical and greedy, is there any reason to believe this debt will be honored?".

[ Parent | on HN ]
Re:India’s banking system is flirting with a Lehman moment by someguydave on Tuesday November 20, 2018 @08:02AM (#18493474)
You make it sound like the answer to the student’s question is something like: “Government debt is different because it’s in a currency that the government can arbitrarily create. The government can force its subjects to use this currency through the power of taxation and in the worst case, military occupation and martial law”
[ Parent | on HN ]