The federal debt will be the largest since the Second World War when it peaked at 109% of GDP. The conventional Chicago School solution to a recession is to increase money supply, but as Japan's experience amply demonstrates increasing public debt does not always lead to economic recovery. Their huge increase in government debt was a result of rescuing banks, insurance and other companies after their real estate bubble burst in 1988:
source: Hoisington Investment Management Company via www.marketoracle.co.uk
The federal debt will be the largest since the Second World War when it peaked at 109% of GDP. The conventional Chicago School solution to a recession is to increase money supply, but as Japan's experience amply demonstrates increasing public debt does not always lead to economic recovery. Their huge increase in government debt was a result of rescuing banks, insurance and other companies after their real estate bubble burst in 1988: