Saturday, February 27, 2010

What happens when countries pile up debt?

Business Insider interviews Ken Rogoff:  Growth slows way down; and the yuan replaces the dollar.
  • When countries hit gross government debt as 90-100% of GDP, problems are bound to arise.
  • If countries go too long with stimulus it can leave them in a debt trap and with prolonged slow growth.
  • The U.S. has been in 'default' before -- when it went off the gold standard -- and there is no reason why it won't have problems again.
  • Banking crises inevitably lead to sovereign debt crises as government

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