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> Debt-to-GDP ratios and the cost of servicing existing debt together mean that there are difficult budgeting decisions on the horizon for many western governme
by User23 4y ago
> Debt-to-GDP ratios and the cost of servicing existing debt together mean that there are difficult budgeting decisions on the horizon for many western governments
That's not at all how modern money and economics work. There is no transfer mechanism from Debt:GDP to economic productivity. That's not to say that a sovereign currency issuing government can't shoot itself in the foot any number of ways of course.
- thwayunion 4y agoIt's definitely how the US Congress works, which is really the only relevant consideration since the purse strings are controlled by Congress. Debt servicing costs and the cost of new debt have a direct impact on spending levels via the debt ceiling, which is controlled by Congress. On an unrelated note, I'm not sure what modern money theories you're referring to, but the theories which purported that we didn't have to worry about inflation seem to be... slightly more out of favor than they were 1-2 years ago.