That was the question recently posed by Ben Carlson who laid out several arguments as to why spiraling Government debt may not matter. To wit:
“Is this debt so unsustainable it’s going to wreck future generations and leave them holding the bag? Are we really screwing the grandkids?
Although absolute debt heading into this crisis was high, you could argue we’ve never been in a better position to add debt to the country’s balance sheet. Generationally low interest rates and subdued inflation make for a perfect opportunity to add debt during this type of crisis.”
THE CONUNDRUM
On the surface it certainly seems to be a reasonable argument. However, while everyone is in a hurry to rationalize the need to take on trillions in debt, no one is discussing either the consequences of such actions, or more importantly how, to reverse the process.
Ben’s view on debt is not unique. The WSJ maintains a similar view.
“The usual fear is that high government debt leads to a crisis or excessive inflation. But there’s little risk of the first, and nothing inevitable about the second. It depends on choices to be made by the Federal Reserve and, indirectly, Mr. Mc
Connell, since he has some say in who sits on the Fed.”
WSJ-Debt Burdens Impact
Source
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