Friday, January 4, 2019

Borrowing capacity is an asset that could end up having been consumed and squandered.

The capacity to borrow at a reasonable interest rates (or the seignorage when printing money) is a very valuable strategic sovereign asset. 

It should not be squandered away by the generation in turn only to benefit its members, or with some non-productive investments. 

When public borrowings are authorized, that should come with a clear recognition that a part of that borrowing capacity is being consumed, and with an indication of who (children or grandchildren born what year) are  expected to have to pay back that debt.

http://unsustainabledebtsustainability.blogspot.com/2004/11/bank-regulators-are-favoring-too-much.html

PS. Have we not already imposed a too large reverse mortgage on our economy?

PS. By assigning a zero-risk weight to Eurozone sovereign’s debts, even though none of these can print euros o their own, much of that capacity to borrow at a reasonable interest rates that could be so helpful with the outbreak of coronavirus has now been consumed?