Fiscal hawks have been sounding the alarm about rising debt levels for decades, but their nightmare scenario of runaway inflation hasn’t come to pass. How do we know if this time is different? In April, Reason’s Zach Weissmueller spoke with the Hoover Institution’s John Cochrane, an economist and self-proclaimed debt crisis “doomsayer.”
Q: At the end of World War II, the debt-to-GDP ratio was similar to today’s, the economy boomed, and we were able to slowly grow our way out of it. Is that a good analogy to the pandemic?
A: We borrowed a ton of money to save the world from fascism. Then we stopped spending money. The war was over. The U.S. after World War II ran steady primary surpluses—whereas right now we’re talking about at least 3 to 5 percent primary deficits forever, plus stimulus in every crisis, plus Social Security and Medicare.
This story is from the August - September 2021 edition of Reason magazine.
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This story is from the August - September 2021 edition of Reason magazine.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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