Japan has faced dire warnings about its debt for more than a decade; as of this week, it could borrow long term at an interest rate of less than 1 percent.
Debt has risen, but despite constant warnings of imminent crisis — and even downgrades from rating agencies back in 2002 — the government is still able to borrow, long term, at an interest rate of only 1.1 percent.
In particular, they say, never mind the current ability of the U.S. government to borrow long term at remarkably low interest rates — any day now, budget deficits will lead to a collapse in investor confidence, and rates will soar.
They seemed to offer the borrowers — typically local governments or quasi-governmental agencies, like the Port Authority of New York and New Jersey and the Michigan Higher Education Student Loan Authority — a way to borrow long term without paying the relatively high interest rates investors usually demand on long-term loans.
And while doomsayers keep predicting a fiscal crisis in Japan, hyping each uptick in interest rates as a sign of the imminent apocalypse, it keeps not happening: Japan's government can still borrow long term at a rate of less than 1 percent.
Japan tried - and failed: banks were too willing to hold the reserves that the central bank released as it bought back bonds...Consider, next, whether the inflationary cure would work as advertised...Even for distressed households that have borrowed long term, the effects of higher inflation are uncertain...Of course, any windfall to borrowers has to come from someone else's wealth.
President George W. Bush George W. Bush 's tax cuts, which stretch out over ten years, have encouraged investors to believe that the government will have to borrow long term to pay for them.
What Mr. Krugman was saying is that the Government can borrow long term at 3.2% and inflation is 2% so the real cost of debt is only 1.2%.
A futuristic promo shot featuring Jepsen in front of a model home prompts "Queen of borrowing long-term debt finance to purchase new property".
They'll likely increase dividends this year, and possibly buy back shares while borrowing long-term cheap money from a gullible bond market.
