Yes,but why does USA which has the biggest debt not face such problems?
The USA has US dollar denominated debt and therefore that's no foreign debt. That's local debt. Local debt can be monetized by the central bank. Thus, increasing the monetary mass and devaluating the currency. That's what most countries used to do before the German principle of stable prices won the day and sound public finance management became the de facto standard.
But most importantly, the USA has the unique advantage of having the de facto international currency of the world. USA debt is as liquid as the dollar itself and is highly in demand. Most central banks keep their dollar reserves in form of american public debt, and thus cheaply financing american borrowing.
For example has anyone told Hungarians that their GDP increase and increase in living standards is due to heavy borrowing and not to real increase in productivity?
Sadly, it's not the Hungarians who decide but their political leaders whose only interest is reaching power and keeping it.
This is not a Hungarian problem. This is a modern problem in all countries. As a politician, you do not access power by promising health care privatisation, education privatisation, drastic defense expenditure reductions and halving pensions benefits. You'd have to keep the current level of spending AND promise more on top.
PJ
