Debt Deficit Spending

Dear Ladies and Gentlemen

The Swiss writer and architect Max Frisch famously claimed: a crisis is a productive state; you just have to take away the flavour of catastrophe.

Global Debt Level

According to AXIOS, current global debt in relation to global GDP stands at 356%. This is a fairly high number, Ladies and Gentlemen, and at least to some extent worrisome.

Current Free-Market Order

It seems the current free-market order is overridden by sustained political intervention. I would not be surprised if this led to structural inertia right down to the broad electoral base, i.e. the average citizens. Alternatively, in other words, if a state intervenes massively in economic processes over a long period and is not prepared to hand those economic processes back from the hands of politicians and bureaucrats right into the hands of the economy’s primary stakeholders, a lethargic attitude among those stakeholder right down to average citizens can hardly be avoided.

Conviction

Look, Ladies and Gentlemen, one could easily argue, and I am convinced this is the case, that the problem is not the awareness or acceptance of some of the current issues by political leaders but the will to deal with them. Because unpopular views or actions, even if maybe necessary, are unable of gaining majority support, which is likely to lead to political consensus on the lowest common denominator, which likely does not necessarily lead to the best possible outcome,no?

Solution?

This is a very complex topic, and although I believe intervention during the Great Financial Crisis and the Covid-19 Pandemic was justified, probably more sooner than later, governments should refrain from further increasing debt deficit spending, because any further departure from fiscal solidity may hurt future economic prosperity.

Next Week

Ladies and Gentlemen, I will be on vacation next week and will only send out my next weekly on May 21, 2021. Thanks for your understanding.

Please do not hesitate to write back to me and please let me know your views!

… but please do not forget (instead of hitting the reply button) to send your messages to smk@incrementum.li

Many thanks, indeed!

Ladies and Gentlemen, I wish you an excellent start to the day, a wonderful weekend, and above all, good health!

Yours truly,

Stefan M. Kremeth