Here's Why Here's Why Governments Just Keep Piling Up Debt
Oct 11, 2024
In this discussion, Stephanie Flanders, Bloomberg's Head of Economics and Government, shares her insights on the growing government debt fueled by pandemic stimulus plans. She reveals how rising interest rates complicate debt management and the public's evolving attitude towards spending and austerity. Flanders contrasts the experiences of the US and France, emphasizing how economic growth plays a crucial role in managing debt. The conversation highlights the intricate balance between fiscal responsibility and fostering recovery in a post-pandemic world.
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Government Response During Crises
- Governments have historically taken on debt during significant crises to stabilize economies. This approach is often better than doing nothing.
Interest Rates and Debt
- Rising interest rates significantly impact governments' ability to manage debt. Higher interest payments make it more challenging to sustain existing debt levels.
Pandemic Spending Changes
- The pandemic broke the taboo around government borrowing, leading to increased spending on various issues. Politicians now find it harder to advocate for austerity measures.