If the real interest rate is greater than zero (r >0), the purchasing power of the investors would increase (hence their wealth would increase). At the same time, if the GDP growth is zero investors would not find better opportunities elsewhere in the economy (risky investments). So why would investors view new issues as part of Ponzi s…
If the real interest rate is greater than zero (r >0), the purchasing power of the investors would increase (hence their wealth would increase). At the same time, if the GDP growth is zero investors would not find better opportunities elsewhere in the economy (risky investments). So why would investors view new issues as part of Ponzi scheme?
Also, governments could keep printing the money to repay debt and stimulate the economy for growth. Once the desired economic growth is achieved government could start issuing new debt to control unsustainable growth and inflation.
Yes, if r>g there is no ponzi scheme, but the government constantly increases its debt/GDP ratio as soon as it borrows. As for printing money to finance additional growth, I will leave that to you to figure out what is wrong with that suggestion.
If the real interest rate is greater than zero (r >0), the purchasing power of the investors would increase (hence their wealth would increase). At the same time, if the GDP growth is zero investors would not find better opportunities elsewhere in the economy (risky investments). So why would investors view new issues as part of Ponzi scheme?
Also, governments could keep printing the money to repay debt and stimulate the economy for growth. Once the desired economic growth is achieved government could start issuing new debt to control unsustainable growth and inflation.
Yes, if r>g there is no ponzi scheme, but the government constantly increases its debt/GDP ratio as soon as it borrows. As for printing money to finance additional growth, I will leave that to you to figure out what is wrong with that suggestion.