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RE: Inflation, Deflation, a Crystal Ball and Adaptability
Good point, as long as someone is willing to pay for their bonds. As an example, Argentina just recently issued 100 year bonds at 7.9%. Illinois may be in trouble soon but as a state, it does not issue currency. Many emerging economies have debt issued in US dollars, so that is also in play. The Debt ceiling in the US also could be part of this discussion as some spending would have to reduced there.
Sorry, what I mean is a sovereign issuer doesn't actually have to issue bonds to fund spending.
Real lengthy, but broken up into easily readable articles, check out Randal Wray's Modern Monetary Theory Primer.
Or this all in one from one of the lads at Bennelong Funds
Was Argentina's bond issuance in local currency or USD? I saw the 100yr headline last week, but didn't read the article. Borrowing in a currency you don't issue is nearly always a shocking idea. As is signing away your monetary sovereignty like all of Europe did.
... and yeah you're right about Illinois ... individual States don't issue currency, so they really are fiscally constrained to whatever they can raise through bond issuance/receive in federal funding/tax from residents and businesses.
Thanks for the links, will read, so much to learn. Looks like the Argentinian bonds were issued in USD. http://www.nasdaq.com/article/argentina-raises-eyebrows-with-surprise-100year-bond-sale-20170619-00941
I wonder what the chances are of Argentina defaulting on a USD loan in the next 100 years? I'd be charging a wicked premium if I was writing options on that!
Glad your interested in MMT, it's starting to gain a lot of traction. This is what young economists are learning at Newcastle Uni.