Two months ago, the lead story of The Economist concerned “The Coming Debt Emergency”. Unlike recent debt crises, the coming debt emergency predicted by The Economist will be unusual in that it will afflict developed world economies rather than emerging economies. The London-based magazine queried “How long can governments live so far beyond their means? Rich-world public debt is already worth 110% of GDP; before the covid-19 pandemic, it had been so high only after the Napoleonic wars.”
As we should know in this country only too well, there can be particular problems with a debt-fuelled economic crisis. If monies have been borrowed to fund the purchase of expensive assets, a financial crisis can feed on itself and make things a lot worse once things go into reverse.
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