Unsustainable Finance COVID-19 has reinforced a vicious spiral in public finance--one that will ultimately debase the world’s reserve fiat currencies, namely the US Dollar. Developed world governments have been able to borrow very cheaply for a very long time. This has invited a moral hazard into public finance: why cut spending or collect more tax when borrowing can support the economy just fine? And further: as long as inflation remains suppressed, a country’s federal reserve can continue to print money and buy that same country’s cheap debt. This self-referential public financing works as long as at least one of two conditions hold:
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The Frontier
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Unsustainable Finance COVID-19 has reinforced a vicious spiral in public finance--one that will ultimately debase the world’s reserve fiat currencies, namely the US Dollar. Developed world governments have been able to borrow very cheaply for a very long time. This has invited a moral hazard into public finance: why cut spending or collect more tax when borrowing can support the economy just fine? And further: as long as inflation remains suppressed, a country’s federal reserve can continue to print money and buy that same country’s cheap debt. This self-referential public financing works as long as at least one of two conditions hold: