@hannah_tdo @FossGregfoss For "debt spiral" to be guaranteed in this model is seems necessary not just to have total debt in dollars increasing, but also debt to GDP ratio not able to decrease so the debt also gets harder to repay.
@hannah_tdo @FossGregfoss I agree the size of debt would get bigger in dollar terms, but the debt to GDP ratio would be decrease so long as GDP was higher than 3%. If nothing else changed, in the long run it would become trivial to repay all debt. No guaranteed debt spiral.
@FossGregfoss GDP is $100, debt is $400. After a year GDP is $103 and debt is $412 ($12 interest at 3%), debt to GDP is still 4x. This is stable without some other term in the model, is it not? What am I missing?
@FossGregfoss If GDP growth is just 3% matching the interest rate, the Debt/GDP would stay constant at 4x, assuming no new debt other than interest, as both the numerator and denominator are growing at 3% per year. What are the other assumptions here that make a debt spiral?
@SF_emergency@Jason@LondonBreed Could you please try to make the binding orders consistent with the recommendations? If the SIP order is still active, then you are offering guidance that encourages breaking the law.
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