The Trump administration is set to resume annual budget deficits exceeding $1 trillion. The national debt (the cumulative tally of annual deficits) now exceeds $22 trillion. Our debt-to-GDP ratio will soon reach a level not seen since World War II. Deficit scolds have bemoaned this situation for years, while the problem only worsens.
Most economists advise that when a business cycle nears its peak, it’s important to establish the monetary- and fiscal-policy reserves that will be needed when the economy again heads south. As will inevitably happen. Those naïve optimists who believe that business cycles have been repealed and that interest rates will remain low forever will experience a major shock.