On Government Debt Thresholds: How Much is Too Much?
The public debt ratio is reaching the 60% threshold that is considered to be high-risk, but should you be worried?
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Breaching debt thresholds set by external parties is not necessarily a big issue, and any discussion on debt has to be viewed within the context of the existing health crisis, the spending meltdown it has created, and the need to have government spending that (i) stimulates the economy and, more importantly, (ii) protects the population in an unprecedented pandemic. A strong fixation with debt to GDP levels may simply force a government to avoid incurring debts needed to fund vaccines or other public health measures and also leave the economy alone to its own devices and stagnate for lack of stimulus, contrary to sound economy theory and practice.