Funny how things like abstract economic/financial theory keeps getting whacked by common-sense that every teenager used to know. A man pays his debts. If a person doesn't pay their debts, then they aren't a man - they are a leech. Substitute 'country' for 'man' and it still makes sense. Too bad not very many teenagers (or adults for that matter) seem to think their debts are someone else's problem
It can and should be paid down to the value of the assets it was used to finance -- a lost less than the total.
What cannot be recovered, however, is the transfer of resurces from investmet to consumption that the rest of it represents, the loss of income from the return on those never-made investments.
I have always been a fan of Alexander Hamilton. One of my favorite historical counter-factuals is what if Hamilton had killed Burr? Someone at Hoover needs to ask Lord Roberts and Stephen Kotkin their thoughts on the topic.
As I was reading this, I was thinking about M+M theory....What would Merton Miller say about debt?
Funny how things like abstract economic/financial theory keeps getting whacked by common-sense that every teenager used to know. A man pays his debts. If a person doesn't pay their debts, then they aren't a man - they are a leech. Substitute 'country' for 'man' and it still makes sense. Too bad not very many teenagers (or adults for that matter) seem to think their debts are someone else's problem
It can and should be paid down to the value of the assets it was used to finance -- a lost less than the total.
What cannot be recovered, however, is the transfer of resurces from investmet to consumption that the rest of it represents, the loss of income from the return on those never-made investments.
I have always been a fan of Alexander Hamilton. One of my favorite historical counter-factuals is what if Hamilton had killed Burr? Someone at Hoover needs to ask Lord Roberts and Stephen Kotkin their thoughts on the topic.