Atif Mian on Breaking the Debt Supercycle

March 11, 2024

In an essay published in the International Monetary Fund's magazine, Finance & Development, Atif Mian argues that the enormous growth in debt over the last few decades has created serious macroeconomic imbalances that pose a threat to future prosperity.

"...The debt supercycle is the product of an ever-increasing buildup of borrowing by consumers and governments. For example, total debt was about 140 percent of GDP between 1960 and 1980 in the United States, but has since more than doubled—to 300 percent of GDP. The same trend holds true globally. In fact, not even the Great Recession of 2008—which in many ways was a result of the excesses of borrowing—could put a dent in debt’s relentless upward march. It would be a mistake to think that 2008 reflected merely some unfortunate policy misstep. The buildup in debt that led to the 2008 crisis stemmed from deep structural imbalances in the economy. Those imbalances persist, as do the dangers associated with them."

Atif Mian is John H. Laporte, Jr. Class of 1967 Professor of Economics, Public Policy and Finance and Director of the JRCPPF. Read Mian's essay, Breaking the Debt Supercycle, in full.