In recent decades, national debt levels have consistently risen across many countries, prompting ongoing debate over whether this trend poses a timebomb threat or simply reflects a manageable economic strategy. Supporters of sustained government borrowing argue that it enables investments in growth, public services, and crisis response, especially when interest rates are low and inflation helps reduce the real burden of old debt.
They point to mechanisms like debt rollover and long-term economic growth as tools that can keep debt from becoming unmanageable. However, explaining this rationale is not to endorse it without question – critics warn that unchecked debt can lead to long-term consequences, including rising interest costs, inflationary pressures, and eventual loss of market confidence. Understanding this side of the argument helps clarify why many governments continue to borrow despite rising debt levels.
Most countries’ debt keeps rising because they borrow to fund growth, services, or emergencies faster than they grow the economy itself. And few are super concerned with paying it down because:
(1) They can usually roll over debt forever,
(2) Inflation erodes old debt’s real value, and
(3) Political priorities favor spending now over saving later.
This graph shows how government debt-to-GDP (blue line) generally rises over time, while interest rates (red dashed line) trend downward – making it easier and cheaper for governments to borrow more without feeling immediate pain.
Here’s a little more info unpacked:
Borrowing is relatively cheap
Interest rates have been fairly low for decades (with a few exceptions recently). So governments figure it’s smarter to borrow today to fund investments, social programs, defense, etc., rather than slash spending or raise taxes, which voters hate.
Debt rollover is normal
Governments don’t usually “pay off” debt like a credit card – they refinance it. When a bond comes due, they just issue a new one. As long as markets trust them to pay interest, the machine keeps running.
Economic growth is the goal
The idea is, if a country grows its economy faster than it grows its debt, the debt-to-GDP ratio shrinks naturally without needing painful austerity. (But that doesn’t always happen.)
Inflation helps debtors
A bit of inflation eats away at the real value of outstanding debt. If you borrowed $1 trillion 20 years ago, that’s less painful to pay back today if the economy and prices have doubled.
Politics reward short-term thinking
Politicians usually operate on 2–6 year election cycles. Cutting spending or raising taxes to pay down debt might be good in the long run, but it’s politically unpopular in the short run.
All that being said – some countries and analysts are concerned. Rising debt can eventually lead to higher interest costs (which crowd out useful spending), higher inflation risks, or financial crises if markets lose confidence. But for now, most major economies believe they have “fiscal space” to keep going without immediate danger.