US Fiscal Imbalances Risk Decades of Slow Growth Rather Than Crisis

The US is on an unsustainable fiscal path with debt accumulating faster than economic growth. This could lead to falling growth, inflation, and interest rates over time rather than a debt crisis.

Historically, deficit spending and debt accumulation have not caused high inflation. The recent bout was due to pandemic stimulus, not just debt.

Much government spending now goes to areas like retiree benefits and tax cuts that produce low economic multipliers. This crowds out more productive investments.

Negative net national saving in the US means the country is literally spending more than it makes. This is putting strain on markets.

The likely endgame is not a spike in rates or inflation but further "Japanification" - a process where growth, inflation and rates trend lower over decades.