Re:Austerity Is an Antidemocratic Strategy to Boost Capital
by wongarsu on Wednesday January 10, 2024 @06:04AM
(#38938917)
I think both are important figures. Cost-of-repayment tells you how much your debt currently drags your budget down. Total debt in relation to GDP tells you how quickly you could pay it off if the cost of new debt skyrockets in the future.
If for some internal or external reason people are suddenly only willing to lend to you at 4x the previous cost, your cost-of-repayment will quadruple over the next ~20 years. Having a lower debt-to-gdp ratio gives you more flexibility on how to react to this because lowering your debt by a significant margin becomes one of the viable strategies.
If for some internal or external reason people are suddenly only willing to lend to you at 4x the previous cost, your cost-of-repayment will quadruple over the next ~20 years. Having a lower debt-to-gdp ratio gives you more flexibility on how to react to this because lowering your debt by a significant margin becomes one of the viable strategies.