‘The US fiscal deficit rose from 6.4 per cent of GDP in 2019 to 17.5 per cent in 2020. This is an increase of 11.1 percentage points in GDP fiscal support to defend a decline of 5.8 percentage points in GDP growth...
‘The Biden administration is betting that the largest US stimulus package since World War II will restore American competitiveness and heal the nation. But much of this is not funded by domestic savings, such as taxing the rich, but by borrowing on the US dollar.
‘The rest of the world will not fund the dollar forever, certainly not at near-zero interest rates. And if interest rates rise, the fiscal costs would be substantially higher. So bet on the Fed doing more to keep rates low. The truth of US debt is that it is not debt, but the rest of the world’s equity. America is the world’s too-big-to-fail borrower. If Biden fails, we will lose.’
Read here (South China Morning Post, Mar 13, 2021)
