Paul Krugman

@paulkrugman ↗

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Last Checked Feb. 7, 2021

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Fri Jan 15 17:22:48 +0000 2021

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Paul Krugman @paulkrugman

But that understates just how sustainable debt is. We don't care about the absolute level of debt; if we worry at all, we worry about the ratio of debt to GDP. And this does the opposite of snowballing — it shrinks, other things equal — if r<g. What? 4/ — PolitiTweet.org

Posted Jan. 15, 2021

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Paul Krugman @paulkrugman

One reason is that the real value of debt is eroded by inflation. Real interest rates are currently negative, and overall real interest payments, as Furman and Summers point out, are at historic lows 3/ https://t.co/ooqy1WExMl https://t.co/8gN3WjKm87 — PolitiTweet.org

Posted Jan. 15, 2021

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Paul Krugman @paulkrugman

r is the rate of interest on government debt; g the economy's growth rate. You can do either both nominal or real. Let's do nominal, and use CBO's estimate of potential GDP to smooth out business cycles 5/ https://t.co/bgLGnL6xFq — PolitiTweet.org

Posted Jan. 15, 2021