The debt-to-GDP ratio has two inputs: Debt and GDP. The ratio has partially increased due to rising debt, but most of the increase came from falling GDP in this

The debt-to-GDP ratio has two inputs: Debt and GDP. The ratio has partially increased due to rising debt, but most of the increase came from falling GDP in this case. I agree that excessive debt is bad, but I also can see that counter-cyclical fiscal policy can help shorten recessions such as the COVID recession. Note that only 1/3 of the headline number comes from government debt. The rest is private sector. I’m in the camp that thinks we’ve overcompensated for this recession with too much spending, but I also don’t think it’s as catastrophically bad as some of the claims. We’re running the economy red hot and it will eventually pull back, but at the same time we would have had a recession right away due to COVID lockdowns if not for some amount of stimulus. It’s a tricky balance to get right and we’ll never get it perfect, but I also don’t think that we’re winding up for some sort of economic collapse. Pullbacks will happen, but like previous recessions they too will end. I know several people who have been betting on a recession for over 5 years now by exiting the stock market. At this point we could have a 50% drop in the stock market and they’d still only break even on that bet.