In a post yesterday, Paul Krugman notes the CBOs long-term projections for federal government deficits and the national debt now show a reduced projection of nominal interest rates:
This markdown has the effect of making the budget outlook — which was already a lot less dire than conventional wisdom has it — look even less dire.
After a bit of discussion of debt-interest rate dynamics—which I earlier discussed in detail here and in my series here (printable version here)—Krugman explains the importance of understanding currency issuers like the US versus currency users like the Eurozone nations for understanding these dynamics:
