The US has the highest level of debt in the world, but on a per capita basis debt (at 95 percent of GDP) it’s a long way behind Greece (nearly 150 percent of GDP) and others in Europe.
Dean Baker, co-director of the Center for Economic and Policy Research in Washington, says debt is an issue, but it’s not out of control. In this edition of BTalk he says the problem is really politicians failing to agree on the need to raise the debt ceiling, a control measure that is unique to the US.
Hence, the crisis. If agreement is not reached by August 2nd, the US will not be able to borrow further, because of internal controls, not because of a shortage of available lenders.
It seems there is no choice but to raise the debt ceiling, but the need to reach agreement provides an opportunity for the Republicans to push for public spending cuts. So Medicare could suffer.
Meanwhile the share market is taking a hit, money is shifting to the gold market and the IMF is saying the global economy could pay the price. It sounds like a classic case of politicians holding the country (or the world) to ransom if they don’t get their way.
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Can MMT work in countries with a trade deficit?
MMT suggests governments can spend until we reach full employment. But does that work in smaller countries with a trade deficit?
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The divided story of rate expectations
Lots more volatility in bond markets, with front end yields rising higher in the US, but falling sharply in the UK. NAB’s Rodrigo Catril explains why the two economies are suddenly heading in opposite directions.
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Will internet kill the digital radio star?
Next month digital radio will be rolled out in most Australian capital cities. But is it too little, too late? Is the real future for radio moving online?
