by Public debt — a macroeconomic necessity The problem stems from the fact that the affluent, which include successful entrepreneurs and capital owners, save relatively more than average or poor households … For this to work out, additional demand would have to be created … The implication of this is that there’s a macroeconomic requirement to run public deficits, founded on a demand gap that arises from households and firms wanting to set aside savings in the form of money … This demand gap cannot be closed but by an increase in government spending and hence debt. Private debt could close it only temporarily since it cannot rise forever. Household debt to GDP ratios have risen substantially in many countries over the last decades, but people will not
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Lars Pålsson Syll considers the following as important: Economics
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Public debt — a macroeconomic necessity
The problem stems from the fact that the affluent, which include successful entrepreneurs and capital owners, save relatively more than average or poor households … For this to work out, additional demand would have to be created …
The implication of this is that there’s a macroeconomic requirement to run public deficits, founded on a demand gap that arises from households and firms wanting to set aside savings in the form of money … This demand gap cannot be closed but by an increase in government spending and hence debt.
Private debt could close it only temporarily since it cannot rise forever. Household debt to GDP ratios have risen substantially in many countries over the last decades, but people will not accept mortgage payments in the range of 50-100 per cent of their disposable income …
A permanent public deficit is not a pathological symptom, but a macroeconomic necessity in order for private households to be in a position to save money.