New Bloomberg Odd Lots episode with economist and debt historian Michael Hudson. He describes how the US might go down the same route as Greece but for different reasons. Here's Joe's summary:
Hudson "makes the case that ballooning private debt burdens over time have the effect of diminishing demand, consumption, and ultimately investment, essentially creating a de facto austerity. Instead of a government being forced into a policy of austerity in order to keep paying bond investors, it's about individuals, households, small businesses, and regional public entities (like, say, the NYC subway) being forced into degradation due to its debt load. In other words, austerity as an emergent phenomenon, as opposed to a discrete policy choice.
"Of course, policy is still important. And a big part of Hudson's work has been the study of debt jubilees or forgiveness, which is an idea that gets batted around from time to time, often in the context of student loans. As he explained, the ancient king Hammurabi engaged in such jubilees, though they weren't universal. They specifically applied only to debts owed to the state after mass crises. So in other words, there's a long history of private sector obligations being taken onto the government's balance sheet in order to wipe the slate clean, and get the economy restarted after a disaster. Another way of saying it is that the best way for the U.S. to avoid become "Greece" is for Washington to spend even more to make whole the private and sub-national entities whose finances have been clobbered by the COVID-19 disaster."
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