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The total consolidated government debt (municipal, state, federal, cash, central bank reserves, insured deposits in excess of bank reserves and what have you) is to a considerable (but not complete) extent endogenous.

That is to say, if you want state-level (and below) consolidated government debt to be less than 60 % of GDP, you will have to let federal consolidated government debt (in the Eurozone that means central bank reserves and cash, but not ensured deposits in excess of the bank's reserves and cash position) to be in excess of 40 % of GDP (the consolidated government liabilities to GDP ratio is on the order of 100 % for most advanced industrial societies).

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Dec 14th, 2011 at 10:33:15 AM EST
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