The world debt overhang is threatening the world recovery, because markets will realize at some point how risky it is and the yields on bonds will increase, Niall Ferguson, professor of history at Harvard University, told CNBC on Thursday.
“I think we have a situation where Greece is leading the pack but other countries will follow,” Ferguson told “Squawk Box Europe.”
Very few countries were able to cope with debt of over 100% of GDP in the past, and “the classic question is whether or not you default or try to inflate it away,” Ferguson said.
The United States is in control of its currency and can print more to reduce its debt, but Greece and other countries in the euro cannot do this, therefore the cost of their debt will rise, he predicted.
The US maybe in control of it’s currency but it is wrong to believe simply printing money add infinitum will solve the problem. Money has to be earned in one way or another – that is what gives it value. If the US wants to payoff it’s $14 trillion debt it is more like $28 trillion – the debt truck not only has to stop but it has to backup. Printing money simply makes the bubble bigger. The US is headed for a massive depression, and so is Europe. They can fiddle the books and use tricky accounting techniques all they like but eventually the piper has to be paid.
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By Prieur du Plessis, on January 29th, 2010 posted in: Investment, Markets, Money 
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The US maybe in control of it’s currency but it is wrong to believe simply printing money add infinitum will solve the problem. Money has to be earned in one way or another – that is what gives it value. If the US wants to payoff it’s $14 trillion debt it is more like $28 trillion – the debt truck not only has to stop but it has to backup. Printing money simply makes the bubble bigger. The US is headed for a massive depression, and so is Europe. They can fiddle the books and use tricky accounting techniques all they like but eventually the piper has to be paid.