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How do you turn a debt surge into a swell?
And today's debt surge, unlike the wartime one, will not be temporary.
Our modern debt surge is much more about declining federal government revenue than it is about runaway spending.
The debt surge since 2000 is different – a point that James Kwak and I explain in detail in our book, published this week.
A rule of thumb for spotting future disaster is how far those weaknesses a debt surge, ill-understood interconnections and uncertainty about a safety net are repeated.The overhaul of financial regulation since 2008 has made most progress on the first two.
Some of us think Simon Johnson's emphasis on government debt is premature -- let's get the economy moving and pivot to deficits afterwards -- but he's certainly right when he says that "Our modern debt surge is much more about declining federal government revenue than it is about runaway spending".
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Debt surged and wages stayed stubbornly high.
And as private debt falls, public debt surges.
Government debt surged from 2008, not because of Greek-style profligacy but rather because of an Irish-style banking disaster.
In another report today, the Federal Reserve said consumer debt surged $17 billion in January, the biggest rise in almost five years.
Last week, the yield on Italy's 10-year debt surged as high as 7.5% in trading in the secondary bond market.
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