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maverick73

Asian Nations Swimming in Debt at Risk From Fed Rate Hikes

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Normally inflation helps governments automatically get more tax revenues. 

In the 1930s, inflation was very low. This is one reason why people were willing to buy UK government debts at low interest rates (in the 1950s, national debt increased to over 230% of GDP). In the post war period, the debt burden was to some extent reduced by the effects of inflation which made it easier for government to meet its repayments.

In the 1970s, unexpected inflation (from oil price shock) helped to reduce governments debt burden in various countries such as US.

Another issue is governments have reflated economies via quantitative easing to stimulate economic activity as well as inflation. Higher GDP is a key factor in helping government gain more tax revenues to pay back debt.

Bond holders may become nervous of economies that is predicted to have deflation and negative economic growth. Although the real value bonds can increase with deflation, they may fear the economy is stagnating too much and so the government will struggle to meet its debt obligations.

I'm guessing lessons learned may have been skipped B)

https://www.bloomberg.com/news/articles/2017-04-10/fed-rate-hikes-raise-risks-for-asian-nations-swimming-in-debt?

 

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A perfect storm. Unsurprisingly, only those countries outside the banksters' clutches enjoy a margin of safety i.e. the Philippines and Indonesia

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