First of all government debt is smallish in comparison to total private debt which is where the real problem lies because even though it has fallen from like 180% of GDP at the height of the crisis to somewhere north of I believe 130% now which means that as the rate of change of credit goes up (as it must or recession will occur) there is less and less “wiggle room” for debt to build back up to a crisis point. The system as it is IS financially unstable AND still sitting on mountains of debt. We must borrow continuously to avoid recession and yet continuous debt build up to the point of un-servicability will result in recession or worse….so we’re “stuck between a rock and a hard place” as the saying goes. Throw in no realistic or stabilizing financial regulations and the disruptive force of AI on aggregate demand/individual incomes….and it’s astonishing to me that we’re here parsing economic theories and obsessing over its minutiae instead of taking proactive, ney, paradigmatic actions.
Even Steve Keen whose unconscious re-discovery of the economy’s cost inflationary nature (the unstable state described above where financial costs continually build up) calls only for “a modern debt jubilee” which is a one-off static palliation of the problem and has been practiced by elites repeatedly over the 5000 year old course of the current paradigm of Debt Only for the form and vehicle for the creation and distribution of money. This palliative static policy stance is curious to me seeings how Keen is (correctly) adamant to de-bunk DSGE.
No, we require a dynamically ongoing, direct, integrated, effective and paradigm changing set of policies that inverts the problematic cost inflationary nature of modern economies and so effects an actual solution to its deepest problems.
That paradigm is Direct and Reciprocal Monetary Gifting.