On top of that, governments can keep this going for a VERY long time – Japan has been doing this for over 20 years. It’s ‘government debt’ now stands at 240% of GDP, but most of these bonds are owned by the Bank of Japan, which effectively means the debt has been ‘monetised’ (the BoJ could simply erase the balance sheet entry and nothing would change).
With the massive COVID-19 stimulus spending materialising overnight never again can a government say there is no money for a social safety net or to protect and rehabilitate the environment; never again can a government say the funds don’t exist for regulators to ensure that business behave ethically and at the very least within the laws of the land.
Austerity, lack of regulatory enforcement and environmental neglect are the result of political choices based on ideology, and not budget constraints. There are REAL constraints on government spending, but those constraints are found in the real economy – the availability of energy, labour and foreign currency (to purchase goods and services not available domestically) to name the key ones.