How long do you think we have?

[steelhouse]

(Reuters) - The Czech central bank lowered on Friday its forecast for the 2013 public sector deficit to 2.3 percent of gross domestic product (GDP) from 2.4 percent.  It trimmed its outlook for the 2014 deficit to 2.0 percent of economic output from a previous forecast of 2.2 percent. In 2015 the Czech central bank sees the public sector deficit at 2.3 percent.  The bank also cut its outlook for the 2013 public debt to 47.2 percent of GDP from a previous expectation of 48.1 percent.  In the 2014 the Czech central bank assumes the debt level should reach 48.0 percent of GDP, down from 48.5 percent forecast earlier.  In the 2015 the Czech central bank expects the debt level to reach 48.1 percent of GDP.

No offense look at the numbers in Argentina.  I would not worry until your deficits are running over 10%.  debt/gdp is not that important it is interest payments compared to revenues.

[johnyj]

There could be a reason that central bank do not write off their holding of government bonds: It will enforce the government to have some fiscal discipline just like any other enterprises

Government can buy 1 billion dollar worth of fireworks and fire them. There will be workers who make 1 billion dollar from the government order. Then those 1 billion dollar will flow to the society and cause inflation

But if government build 1 billion dollar worth of subways in the city. Then they will slowly take those dollars back through tickets sale, thus reduce the inflation pressure (Actually the rise of ticket prise is already an inflation, but that can be regarded as an increase in quality of life)

The whole point of debt based money issuing is to make sure the money will flow back through future consumption. But since there is interest, and consumption is usually less than income (long term wise), this scheme will just accumulate more and more debt that can not be paid back

Currently the government can only pay back the interest, when interest payment can not be sustained anymore, I guess central bank will have to write-off debt, or simply do not require an interest payment from the government (And that will not cause inflation, since no extra money are added to money supply)

[solex]

No offense look at the numbers in Argentina.  I would not worry until your deficits are running over 10%.  debt/gdp is not that important it is interest payments compared to revenues.

The problem is that government deficits are never occasional, they are the norm, and cumulative. Further, GDP is exaggerated. GDP from credit financed consumption counts the same as GDP from production (and shouldn't), resource depletion and environmental destruction is not deducted from GDP. Real GDP is also smaller because Inflation is understated though institutional bias (government paid economists) and hedonics.

[sidhujag]

There could be a reason that central bank do not write off their holding of government bonds: It will enforce the government to have some fiscal discipline just like any other enterprises

Government can buy 1 billion dollar worth of fireworks and fire them. There will be workers who make 1 billion dollar from the government order. Then those 1 billion dollar will flow to the society and cause inflation

But if government build 1 billion dollar worth of subways in the city. Then they will slowly take those dollars back through tickets sale, thus reduce the inflation pressure (Actually the rise of ticket prise is already an inflation, but that can be regarded as an increase in quality of life)

The whole point of debt based money issuing is to make sure the money will flow back through future consumption. But since there is interest, and consumption is usually less than income (long term wise), this scheme will just accumulate more and more debt that can not be paid back

Currently the government can only pay back the interest, when interest payment can not be sustained anymore, I guess central bank will have to write-off debt, or simply do not require an interest payment from the government (And that will not cause inflation, since no extra money are added to money supply)

In a normal soceity your right you pay for infrastructure and it pays for itself over time but most of the money printed went to bailouts from bad choices and to paying interest and warfare. War is very inflationary u blow up a bomb and thats it ur in instant debt. The us doesnt use its machines enough to warrant the money yet more is poured in to deter attackers and keep usd currency afloat.

Read up on the real housewives of wallstreet.. most of qe went to random joe blows like a bankers ex wife for business startup money for example. Why does she get that and others can starve? Feds books r closed and thats inflationary in itself.

[Behemot]

No offense look at the numbers in Argentina.  I would not worry until your deficits are running over 10%.  debt/gdp is not that important it is interest payments compared to revenues.

The problem is that government deficits are never occasional, they are the norm, and cumulative. Further, GDP is exaggerated. GDP from credit financed consumption counts the same as GDP from production (and shouldn't), resource depletion and environmental destruction is not deducted from GDP. Real GDP is also smaller because Inflation is understated though institutional bias (government paid economists) and hedonics.

This. You see for example here (Y axis in bilions of CZK) that the government is spending more than it gets each year for more than a decade now. Supposed difference for this year is 100 bilion. The interest rate is holding for this moment because of the bonds-for-citizens emission but what I've read, even these have mostly been bought by small and medium investment companies. Sooner or later they will stop buying it and regime will have to lend from big bank groups again. Before that, the interests already begun to rise exponentialy and this will only give them few years, after that it will continue with the same.

[btdir]

how much is BTC worth now?

[Behemot]

In CZK?

[Behemot]

As for the Germany, seems they already are in state of almost-orthogonal part of the exponential curve:

It makes me think we probably won't even have time to go bancrupt by ourself, I think that when Greece, Portugal and others will go to real crash, the Eurozone will crash as well with Germany in the center. They will take us down no matter we are not in Eurozone.

I am just thinking what will come from that. Some miraculous fiat reform? Second Hitler? Civil war?