US

Rogoff: America Has Defaulted Before And It Will Run Into Trouble Again

Kenneth Rogoff spoke with CNBC today about the threat of sovereign debt crises today.

The Key Points:

  • When countries hit gross government debt as 90-100% of GDP, problems are bound to arise.
  • If countries go too long with stimulus it can leave them in a debt trap and with prolonged slow growth.
  • The U.S. has been in ‘default’ before — when it went off the gold standard — and there is no reason why it won’t have problems again.
  • Banking crises inevitably lead to sovereign debt crises as governments take on the debt.

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