Quote (Djunior @ 5 Sep 2024 22:36)
The situation is not as bad as you're trying to frame it. The high inflation is mostly caused by some bad decisions by Erdogan IIRC (which should be reversed) and like I pointed out debt to GDP is really low if you compare that to EU countries.
And a NATO country applying to BRICS is a massive embarrassment.
Debt to GDP ratio is a really esoteric metric. It only matters if the financial markets lose their trust in a country's ability to service its debt and interest payments. Before that point is hit, it's meaningless.
A high debt to GDP ratio with a strong, diversified economy and a strong currency is most definitely a more robust economic position to be in than being an emerging country with a one-trick pony economy and a shitty currency that no one else is interested in.
There is certainly an upper limit to how high the debt to GDP can get before things get dicey, but we haven't really hit that point yet in the first world nations. The Americans and the EU also have the benefit that their currencies are reserve currencies. Institutional investors from the rest of the world could shun the USD or the EUR, but realistically they can't eschew both at the same time. Where else would they go? The British pound, which has all the same drawbacks, just more vulnerable with a smaller underlying economy? The Swiss franc which is based on a country with less than 10 million people? Would they trust any South American currency? The Japanese yen which is being inflated away by the Bank of Japan? Russian rubles or Iranian rial?
The only possible alternative is the Chinese yuan, which is not a free-floating currency; its course is determined by the central bank according to the orders of the CCP, i.e. out of political, rather than economic reasons. Shit would need to hit the fan dramatically in the US or the EU before the third countries would rather trust their money to Xi.
This post was edited by Black XistenZ on Sep 5 2024 03:46pm