Almost no sovereign actually defaults; instead they expand the central bank balance sheet, print money, and suffer inflation, but keep paying—meaning the currency, not default, becomes the escape valve, which is why Japan at 265% debt-to-GDP can never let rates move and must absorb the adjustment through its currency.

causalpending

Speaker

Kyle Bass

Evidence Quote

now they're 265% sovereign debt to GDP. They can never let rates move. They can't. So what does that mean? That means the currency is the is the escape valve.

Source

Global Macro Investing And Geoeconomics With Hedge Fund Investor Kyle Bass | Hoover InstitutionHoover Institution
Created: 6/18/2026, 2:17:47 PM

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