I don’t really know

Paul Krugman recently wrote an article in The New York Times basically advocating for high levels of National debt: Learn to Stop Worrying and Love Debt. Besides the political bias, his point was governments have managed adequately high levels of debt and “nothing” bad has happened.

The Covid crisis is going to be solved creating money and giving it away. Honestly, we are just a humble group of thinkers and don’t have all the answers. However, when we are in doubt we choose two approaches:

1. Follow the big movements. For instance, in investments, before choosing a company, we choose the sector and the country. At the end, even without considering all factors, if the sector has a solid future, geographically the area is doing better than the rest and the price you pay is decent, the investment tends to be successful.

2. Follow common earthy laws. When we see that I receive money for asking a loan, or that I have to pay interest for giving a loan, we feel something is crooked and will not end happily.

When governments can create as much money as they need with no limitation and inflation is under control, and people still trust the currency, we feel we are buying time, but something is wrong.

It is true that the time we buy can be enough. First, the worst currencies won’t be able to survive and suffer tremendously. We are seeing it today, for instance with the Turkish lira or the South African rand. But eventually the good ones will start feeling the pain as well. It is funny that the moment in history in which “size matters”, some countries are trying to go in the other direction (Brexit, independence movements in Spain...).

Highlanders moment?