Two years ago, a respected ex-IMF economist said, “Put bluntly, public debt may have no fiscal cost.” It is a seductive view that has been grabbed by politicians of all stipes to justify virtually unlimited spending based on raising vast amounts of debt, some of it created by their central banks.

But there are problems with deficit spending, the main one is that the benefits all go in one direction, from the young who have to pay it back in the future, to the old who are the primary beneficiaries of current spending.

There are other structural issues too. Deficit spending tends to use savings from other countries so it supresses capital formation in the deficit country, leaving them weaker for longer.

Now another respected economist is calling this “no cost” view out. Not that his argument is new, just newly stated. He says accumulating debt to pay for current expenses is like a Ponzi scheme in that money from new players (the…

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