America Irresponsible national debt Forever? No; US Primary budget deficit, Sveriges primära budgetöverskott
The national debt is rising, and interest rates will follow — eventually.
It never ceases to amaze me how many people — even people who should know better — believe that the basic laws of economics and finance don’t apply to them.
Maybe they think that this time is different, or that they can get something for nothing, or that they are somehow exceptional.
But reality always catches up, even if it sometimes takes a while. This applies to nations as well as individuals.
Interest rates are still low by historical standards, despite America’s huge debt.
Why aren’t bond markets sounding the alarm?
It’s a question people have been asking for more than 20 years now.
No wonder so many economists and politicians convinced themselves that debt doesn’t matter.
MMT
Paul Krugman first wrote about modern monetary theory on March 25, 2011. He last wrote about MMT in a two-part series on February 12-13, 2019.
Although he’s had almost a decade to come to terms with the approach, he is still getting some of the basic ideas wrong.Paul Krugman first wrote about modern monetary theory on March 25, 2011.
He last wrote about MMT in a two-part series on February 12-13, 2019.
Although he’s had almost a decade to come to terms with the approach, he is still getting some of the basic ideas wrong.
A sovereign debt crisis was the sort of thing that happened in Argentina or Greece. All of sudden, worrying about interest rates and debt made you sound like a crank — or worse, it meant you favored austerity.
The vibe shifted, and worrying about debt became socially acceptable again. At least in theory.
Will we look back on this time and marvel at how naïve we all were? Maybe.
America can get away with being fiscally irresponsible so long as its bonds are considered safe. But if and when that changes, the changes in response could be exponential.
Any number of external events could set off the chain reaction: another pandemic, say, or a Chinese blockade of Tawain.
Debt crises tend to unfold slowly and then quickly.
Allison Schrager Bloomberg 17 July 2025
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