Many people are convinced that public debt is a main source of problems for any economy. This sentiment reached hysterical levels in the US in 2011, when even the chairman of the US Joint Chiefs of Staff, four-star Admiral Mike Mullen, called public debt the “biggest threat to national security.” Debt fights culminated in a government shutdown that stripped the US of its AAA rating. This repugnance to government debt remains unabated in many circles.
But proof that the uncontrolled growth of government debt leads to disaster is weak. The evidence, in fact, points in the other direction: economic and financial disasters precede, rather than follow, a surge of public debt.by