Now, everywhere I go I encounter a recrudescence of the fallacy of applying “household economics” to the nation at large. Who is going to pay for this spending, people ask.
Well, the answer is: the government, by borrowing at next-to-zero interest rates, and the economic growth that will revive the government’s coffers in due course, just as it did after the second world war.
I think a substantial case can be made that the government defaulted on most of that debt through inflation. Something they can’t do again because they’ve done it to us once.
It would actually be useful if someone could point to a detailed discussion of this. How much of that post WWII debt mountain was in fact massaged down by inflation and inflation alone?