Instability in the US: It is not debt but the lack of it Alex Izurieta

The true problems of the US economy, to which the rating agencies have turned a blind eye, persist to this day. Standard & Poor’s states that a very large government debt poses a systemic risk and calls for more stringent fiscal austerity. The present analysis points to the conclusion that public sector debt in the US is potentially destabilising, not because it is too large but rather too small for the task at hand.

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(This article was originally published in Economic and Political Weekly, VOL 46 No. 34 August 20 – August 26, 2011.)