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Devaluing the dollar makes paying national debt more expensive

• insane_dreamer 1y ago
  No it makes it cheaper because the US is in a unique position of issuing debt in its own currency.
  • drivebyhooting 1y ago
    You can both be right. Old debt is cheaper to pay but new debt more expensive. And the government runs a deficit so new debt is always accruing.
    • insane_dreamer 1y ago
      New debt is only more expensive if you have to exchange something of value to obtain the USD to pay down the debt. But since the Fed can expand the money supply at will, it's essentially creating new USD out of thin air which can be used. (This is how the US has been able to sustain such a large debt without any real consequences.) What will happen though is that interest rates on T bills will rise, so yes, in that sense, it does eventually become "more expensive" to service new debt. But again it's in nominal dollar terms and so it's just a matter of issuing more dollars. The trick is to do this in a way that doesn't devalue the dollar thus triggering an inflationary cycle.
      • drivebyhooting 1y ago
        It’s an impossible trick. The chicks come home to roost. You can’t have an exponential forever.