Posts with or without credits tagged 'howcountriesgobroke'

Re the U.S. debt downgrade, you should know that credit ratings understate credit risks because they only rate the risk of the government not paying its debt. They don't include the greater risk that the countries in debt will print money to pay their debts thus causing holders of the bonds to suffer losses from the decreased value of the money they're getting (rather than from the decreased quantity of money they're getting). Said differently, for those who care about the value of their money, the risks for U.S. government debt are greater than the rating agencies are conveying. #principles #howcountriesgobroke #debt

When countries have big debt problems and the debt is denominated in their currency, they inevitably devalue the currency. As explained in my upcoming book How Countries Go Broke: The Big Debt Cycle, "debt is currency and currency is debt." In other words, since a debt asset is the promise to receive a specified currency at a future date, and since when one holds a currency one holds it in a debt instrument, debt and currency are essentially the same thing. If you don't like one, you must not like the other. Watch out for the price and value of currency. That is why the dollar has been weak in relation to most other currencies and all currencies have been weak in relation to gold. #principles #howcountriesgobroke