Will the US’s Astronomical National Debt Cause an Economic Crisis?


Politicians’ big spending ways come with massive costs.

There are no free lunches in politics. All spending programs rack up national debt. This debt is no joke. Countries like the US have embarked on profligate fiscal measures that have witnessed it accumulate an astronomical debt burden. 

As a result, these countries face the very dire and real prospect of defaulting on their debt payments. Many heavily indebted countries are then tempted to pursue inflationary policies to reduce their debt burden.

This is a dangerous proposition. Monetary emission is an unruly beast that can break free from its master’s control if pursued to an excessive degree. 

Many American policymakers will be under the impression that inflating the debt away will be a viable strategy to tackle America’s debt problem. But this will prove to be a dangerous gambit as inflation becomes apparent and gets way out of control.

The straightforward solution to many of America’s problems is small government and a return to genuine free markets. Don’t expect politicians to ever get the memo and pursue a path that goes against their principal objective of getting elected.

Embracing free-markets is politically unpopular but it’s the only route going forward if we want to avoid an economic calamity.