People are so used to hearing about the national debt explosion, but not actually experiencing any consequences (so far) beyond the possible impact on inflation, that it's not taken seriously. They would rather get free stuff and loan forgiveness and tax cuts, etc., and all manner of government spend…
People are so used to hearing about the national debt explosion, but not actually experiencing any consequences (so far) beyond the possible impact on inflation, that it's not taken seriously. They would rather get free stuff and loan forgiveness and tax cuts, etc., and all manner of government spending. If the saying "that which cannot go on forever won't", then attention will be given, but will be too late. Sort of like climate alarmists. They make so many impending doom claims that don't pan out, that people just don't believe them.
My guess (and of course it is just a guess) is that China/India will adopt geoengineering at some point. Net zero (for them and probably for us) is just too hard. The US/Europe could implement geoengineering tomorrow, but won’t. The left hates the idea. The right denies global warming. Will the US/Europe eventually benefit from geoengineering? Probably. Will that make any difference? Probably, not.
The impact of debt/deficits is complex. If debt/deficits lead to debt monetization / currency devaluation then the impact is inflationary. However, the answer is not so simple. Note that China and Japan have vast debts (over 200% relative to GDP) with little or no inflation in sight. Indeed, in some countries debt/deficits can actually be deflationary. In some countries, debt/deficits can lead to overvalued currencies in the short and/or medium term. Overvalued currencies are associated with lower inflation, not higher inflation.
This is no hypothetical point. Between 1980 and 1985 Reagan’s deficits raised the value of the dollar a lot. Of course, import prices (and goods competitive with imports) fell. So I would argue that Reagan’s deficits were substantively deflationary. The same argument can be made for Argentina before the crash around 2001.
By the way, Rogoff’s book (‘This Time is Different’) is quite dull. However, the argument is important. Government go broke all the time and have for a very long time.
My two dollars (used to be two cents):
People are so used to hearing about the national debt explosion, but not actually experiencing any consequences (so far) beyond the possible impact on inflation, that it's not taken seriously. They would rather get free stuff and loan forgiveness and tax cuts, etc., and all manner of government spending. If the saying "that which cannot go on forever won't", then attention will be given, but will be too late. Sort of like climate alarmists. They make so many impending doom claims that don't pan out, that people just don't believe them.
My guess (and of course it is just a guess) is that China/India will adopt geoengineering at some point. Net zero (for them and probably for us) is just too hard. The US/Europe could implement geoengineering tomorrow, but won’t. The left hates the idea. The right denies global warming. Will the US/Europe eventually benefit from geoengineering? Probably. Will that make any difference? Probably, not.
The impact of debt/deficits is complex. If debt/deficits lead to debt monetization / currency devaluation then the impact is inflationary. However, the answer is not so simple. Note that China and Japan have vast debts (over 200% relative to GDP) with little or no inflation in sight. Indeed, in some countries debt/deficits can actually be deflationary. In some countries, debt/deficits can lead to overvalued currencies in the short and/or medium term. Overvalued currencies are associated with lower inflation, not higher inflation.
This is no hypothetical point. Between 1980 and 1985 Reagan’s deficits raised the value of the dollar a lot. Of course, import prices (and goods competitive with imports) fell. So I would argue that Reagan’s deficits were substantively deflationary. The same argument can be made for Argentina before the crash around 2001.
By the way, Rogoff’s book (‘This Time is Different’) is quite dull. However, the argument is important. Government go broke all the time and have for a very long time.