1/5
An expansion of debt really isn't "a crisis of the next generation", as one German politicians insists. Too much debt can certainly be a problem for the economy if it sets off financial distress costs, or results in harmful distributions of...
ft.com/content/8d0bdc…
An expansion of debt really isn't "a crisis of the next generation", as one German politicians insists. Too much debt can certainly be a problem for the economy if it sets off financial distress costs, or results in harmful distributions of...
ft.com/content/8d0bdc…
2/5
income, but for an economy that borrows in its own currency, borrowing today does not involve spending resources from the future. It just transfers resources from one group to another within the current generation, and implies another transfer within a future generation.
income, but for an economy that borrows in its own currency, borrowing today does not involve spending resources from the future. It just transfers resources from one group to another within the current generation, and implies another transfer within a future generation.
3/5
What matters is whether or not the transfer today leaves the economy better off. If borrowing crowds out more productive spending and replaces it with less productive spending, the economy is worse off, but "crowding out" hasn't been a problem for decades.
What matters is whether or not the transfer today leaves the economy better off. If borrowing crowds out more productive spending and replaces it with less productive spending, the economy is worse off, but "crowding out" hasn't been a problem for decades.
4/5
If however the proceeds of the borrowing are used to expand the economy's productive capacity (or, in this case, to prevent their contraction), both the current generation of Germans and future generations can be better off. What is more, while the debt may be...
If however the proceeds of the borrowing are used to expand the economy's productive capacity (or, in this case, to prevent their contraction), both the current generation of Germans and future generations can be better off. What is more, while the debt may be...
5/5
higher, the debt burden will be lower because GDP will grow faster than debt.
higher, the debt burden will be lower because GDP will grow faster than debt.
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