Media reviews on the US’ $34 trillion debt pile:
JP Morgan say it might nicely be a “boiling frog” phenomenon for the financial system, as increased deficits and ballooning debt servicing prices might simply turn into unsustainable
What’s this a couple of boiling frog? It is a metaphor (its additionally totally fallacious, a fable, however extra on that under):
- a boiling frog scenario is one through which folks fail to behave on a possible downside that grows over time, inflicting it to turn into extra extreme till it will definitely bubbles over. A frog thrown in boiling water would possibly leap out, but when the water involves a boil slowly, it is too late by the point it notices it is being cooked.
Anyway, JPM argue that:
- nationwide debt hit a contemporary $34 trillion this month
- debt image will solely worsen within the coming years
JPM:
- “The problem for the US is the starting point; every round of fiscal stimulus brings the US one step closer to debt unsustainability,”
- “However, we’re accustomed to deteriorating US government finances with limited consequences for investors, and one day that may change (the boiling frog analogy)”
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Not like US Congresspeople, frogs will not be silly. Should you tried to boil a frog, it’d discover because the temperature elevated and hop out as soon as it bought too sizzling for consolation.
