Free exchange: Governments need to rethink their attitudes to debt

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Political leaders must learn to appreciate the virtues of budget deficits

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The borrowers

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Free exchange

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What machines can tell from your face

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Free exchange

GOVERNMENTS do not always make the best budget managers. Assuming it avoids an accidental debt default, America will run a bigger budget deficit this year than the last, despite a booming economy. Germany runs a surplus—but scrimps on critical investments and annoys its euro-area neighbours in the process. Japan, cowering under a mammoth public-debt pile, is weighing raising its consumption tax, though the last rise strangled a tenuous economic recovery. It is awkward, therefore, that the role of fiscal policy as a recession-fighting tool is only growing. The next downturn will be a painful and dangerous learning experience for many politicians.
When that comes, at …

Link to article: www.economist.com/news/finance-and-economics/21728628-fight-next-recession-fiscal-stimulus-may-matter-more-monetary?fsrc=rss

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