Debt Bugs and Windshields

by John Mauldin

“There is no means of avoiding the final collapse of a boom brought about by credit expansion.” – Ludwig von Mises

Economic recovery is coming, we are told, because the economy has found a new equilibrium. We are supposedly adapting to the new-normal pandemic world, with monetary and (some) fiscal stimulus filling any gaps. Except that’s not what the data says.

Last week I laid out the case that US government debt would be $50 trillion by 2030. That was using straight-line CBO projections but using the 2008 recovery pattern for government revenue plus adding in off-budget debt which averages about $269 billion a year. is now projecting off-budget deficit to rise by over $1 trillion this year. Most of my feedback didn’t dispute the amounts; the disagreement was whether so much debt is a serious problem.

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