Spiralling Government Debt Isn’t a Choice

There is little room in any highly developed economy for further domestic growth. The solution for at least twenty years has been, in effect, to import growth from developing countries by using the monetization of their social and natural commons to prop up our own debt pyramid. This can take several forms: debt slavery, where a nation is forced to

The first is our best-case scenario, although for the reasons I have noted it is unlikely to describe conditions today, especially in capital-rich countries like the U.S. The second and third ways are unsustainable because they actually destroy value by increasing debt faster than they increase debt-servicing capacity.

Deficit country austerity may indeed be part of the correct prescription, but if it is not more than fully matched with surplus-country reflation, it cannot possibly succeed without a sharp rise in global unemployment.

First, the world can embark on a surge in productive investment, probably but not necessarily directed by the state because the private sector might not be in a position to capture the full benefits of investment and so will not have the incentive to invest. Second, we must reduce the income share of the state and of the rich. Or third, we must acc

But you know the fact is that when you run these big debts, the problem is not with your children or your grandchildren, it’s in your lifetime. If you get to really high debt levels, you don’t make it. The market eventually gets concerned.