Which nations have exhausted their fiscal capacity?
Changing Perspectives on Fiscal Policy
Prior to the COVID-19 pandemic, inflation remained persistently low, fostering the belief that central banks could maintain low interest rates indefinitely. This assumption led many governments to accumulate higher levels of debt, confident that interest costs would stay manageable. Modern Monetary Theory represents the most pronounced example of this mindset, but its influence has shaped fiscal strategies more broadly. As a result, budget deficits have expanded in numerous countries since the pandemic, despite its conclusion. The perceived freedom to spend collided with the surge in inflation and increased expenditure demands following COVID-19.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Nobel laureate warns: French debt crisis may be "too big to save," eurozone faces "explosive" crisis
France's debt has reached €3.6 trillion, accounting for 119% of its GDP—the highest level since the creation of the euro. Paul Krugman, the 2008 Nobel Prize winner in Economics, warned that France is on a path of "fiscal unsustainability" and may have gone from "too big to fail" to the dangerous position of being "too big to be rescued." Its eurozone membership could trigger an "explosive debt crisis" and deliver a destructive blow to European integration.
Dollar Index stalls under its high as the Fed's hawks repeat themselves
Gold price holds critical $4,100 support, but can it break $4,200 as inflation risks loom?
Hinkal joins Mastercard Crypto Partner Program for private stablecoin payments
Crypto prices
More
