If it’s not possible to achieve surpluses even in times of economic prosperity, then the problems must be systemic. Due to compound interest, debt tends to grow exponentially. As soon as debt and debt service costs rise faster than income, the vicious circle of over-indebtedness begins.
Currently the industrial nations continue to be faced with the highest levels of public debt in peacetime.
In the US, the Government Accountability Office sees fiscal policy on a path that is intractable in the long-term. In the following illustration of scenarios, rising debt is caused by fundamental imbalances between expenditures and revenues, demographic changes, as well as strongly rising health care costs.
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