Debt: Dangers of Excess

Erik Norland and Blu Putnam

Chapter 2 in Economics Gone Astray, 2019, pp 13-31 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Debt is among the most fundamental and least understood aspects of the macro-economy. The dominant schools of macroeconomic thought — classical, Keynesian and monetarist — pay it inadequate attention. From the perspective of these schools of thought, economies with low levels of debt operate in exactly the same fashion as those with extremely high levels of debt. From their point of view, debt ratios essentially do not matter. The problem with that is in real life, debt levels not only matter, debt burdens influence critical facets of the economy, from the pace of growth to the level of interest rates…

Keywords: Economics; Macroeconomics; Monetary Policy; Fiscal Policy; Inflation; Risk Management; Federal Reserve; Quantitative Easing; Taylor Rule (search for similar items in EconPapers)
JEL-codes: E02 E44 E52 E6 G32 (search for similar items in EconPapers)
Date: 2019
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