Paul Krugman invites us to stop worrying about public debt, even urges us to love it / Opinion, The New York Times, Dec, 3. 2020/. Joining Oliver Blanchard, he sees a “shift in fiscal paradigm”, arguing that public debt is not a major problem.
Maybe for America, but definitely not for others, especially not for emerging economies.
Having low interest rates due to lower inflation, that is the catch, the burden of debt is not what it used to be. It is really funny that Krugman takes the Greek tragedy to support his argument. Due to huge public debts Greece fell from 85% of the EU average GDP level to 66% in the last decade, due to the financial crisis in 2010. The same can happen to some Club Med Euro area members in the next financial crisis.
Can anyone rule out a major financial crisis in the 2020s?
In the lack of the US dollar as the national currency, you must watch both, the level of public debt and the level of debt-servicing.
Governor Matolcsy, MNB, the Central Bank of Hungary