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Friday, August 30, 2019

Debt and Interest in Comparative Perspective

Justin Fox at Bloomberg:
The U.S. is the standout here. Its interest burden is both:

1. Higher than that of other major Western economies (I’ve included the not-so-major Netherlands for reasons that will soon become apparent), and
2. Rising since 2013, while those of the other countries have been falling.

The Organization for Economic Cooperation and Development, the source of the data in the above chart, is the club of the world’s wealthy democracies. Aside from the U.S., it has only two members with higher projected net interest spending for 2019: Greece and Italy, at 3.6% and 3.5% of GDP, respectively. These are both countries beset by perennial worries about the sustainability of their government debt. As already discussed, people in Washington spent a lot of time talking about such concerns in the 1990s but haven’t so much lately. If you look at a long-run interest spending chart, it’s easy enough to see why: the late 1980s and early 1990s were a time of staggeringly high interest payments.