Non-Financial Private Debt Overhang: Post War German Debt Reforms as a Model for a Modern Debt Jubilee?


Naked Capitalism has the post Non-Financial Private Debt Overhang: Post War German Debt Reforms as a Model for a Modern Debt Jubilee?.

The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up … It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something … The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly.

It is very important to understand that private debt overhang is a substantial threat, as opposed to public debt in countries like the USA with a sovereign fiat currency. Public debt and private debt are two very different animals. The private sector is not an issuer of sovereign fiat currency. Please read the article if you did not understand the difference.

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