The typical historical sequence is: private sector makes excessive loans (boom phase), then government increases debt to bail out the private sector (crisis aftermath). Currently this sequence is inverted—the private sector debt has not increased much, but government debt has gone up exponentially, leaving no lender of last resort.
causalpending
Speaker
Ruchir SharmaEvidence Quote
“this time the unusual thing has been that the government which is supposed to be the lender of Last Resort that is where the debt has gone up exponentially and so now the problem is that if you get in trouble where the government uh debt becomes an issue you have no lender of Last Resort left”
Created: 8/11/2026, 8:01:53 AM
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