How to pay for the pandemic

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THIS IS NO time to fret about government debt. While cases of covid-19 soar and economic activity grinds to a halt, governments are right to throw all the resources they can at efforts to limit the pandemic’s human and economic costs. This urgency notwithstanding, the crisis will push sovereign-debt burdens into new territory. Over the past century, major global crises have often led both to large-scale borrowing by governments and to changes—often radical—in the way they handle their creditors. The battle against covid-19 is unlikely to prove an exception. Economic rescue plans now being drawn up are likely to outstrip those employed during the financial crisis; America’s may be worth around 10% of GDP. The blow to output and to tax revenues could also be larger. At least a few economies are likely to find themselves with debt loads well in excess of 150% of GDP.

The history of government borrowing over the past hundred years or so can...



via The Economist: Finance and economics Business Feeds

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