"This decline will occur in two stages," Sullivan states. "First there is the decay as the swelling national debt wears away the economy's foundations and commits more and more future income to foreign creditors. We are already in stage one…"
"When government issues debt," Sullivan explains, "it uses private savings that otherwise could be used for productive new capital and technology. This results in reduced capital formation (both tangible and intangible), which in turn reduces productivity, wages, competitiveness, and economic growth."
Stage two, on which Sullivan will focus next week, is when the nation faces a full-blown economic crisis of "greater default risk, looming inflation, higher interest rates, declining growth, financial market instability, and an acceleration of government borrowing. They feed on each other."
Read Sullivan’s column this week.
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