Central bank chiefs are often reticent to criticize policy settings abroad. Not today: Australia’s central bank chief Philip Lowe questioned the wisdom of America’s fiscal largess and warned the U.S. will struggle to deploy stimulus in the next downturn.
America has had zero fiscal discipline for a long time.
Responding to a question on whether Australia should be more concerned about the spiraling American budget deficit, Lowe said: “you’re better off using fiscal policy than extreme monetary policy. But you can only do that if you’ve behaved yourself in the good times. And my judgment is that the U.S. has not.”
The American governments have been borrowing increasing amounts of money for decades. They've basically pulled forward and spent the wealth of their progeny and then left them with the largest debt in recorded history.
"U.S. federal debt held by the public as a percentage of GDP,
from 1790 to 2013, projected to 2038"
The only question is: when will it come crashing down?