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Between steroids and lethal austerity

May 15, 2024

Since 1990, the US Debt-to-GDP ratio has surged from 55.6% to 126.9%, a staggering increase. In stark contrast, Germany’s public debt level began at 59.3% but rose modestly to 64% over the same period. These figures prompt two crucial questions: Is the US economy overly reliant on leverage, akin to being on steroids? And has Germany’s economy restrained itself to the point of stagnation through austerity measures?

Furthermore, the sustainability of the US debt load hinges heavily on the continuous dominance of the US dollar as the preferred global reserve currency, relying on foreign investors’ continued faith.

Looking from a European standpoint, it seems logical for Germany to consider increasing borrowing to fund essential sectors such as infrastructure, education, and, crucially, defence.

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