Odd Lots Barry Eichengreen on the New Era of High Government Debt
22 snips
Aug 29, 2023 
Barry Eichengreen, a Professor of Economics at UC Berkeley and an expert on government debt, discusses the rising global government debt and its implications for central banks. He delves into the shift from fiscal policies of the 2010s to more proactive approaches now, comparing 'good' versus 'bad' debt. Eichengreen shares insights on political will using historical examples like Greece and Iceland, and examines the relationship between global savings and currency stability. His analysis sheds light on the challenges of managing debt in an inflationary environment.
AI Snips
Chapters
Transcript
Episode notes
Good and Bad Borrowing
- Governments borrow for good reasons like emergency responses and bad reasons like political gridlock.
- Persistent deficits arise when political factions can't agree on spending cuts or tax increases.
Central Bank Concerns
- Central bankers must consider the limited fiscal response available to most countries due to high debt levels.
- They may also face pressure to manage debt through higher inflation, but this could have limited benefits.
Good Debt
- Governments sometimes borrow to fund investments that boost productivity.
- This type of debt can be less problematic as it contributes to economic growth.