Who’s afraid of the Big Bad Wolf?
By Robert Burrows - 1 October 2025
Governments are perched atop a mountain of debt, and the question of how to reduce it has become one of the most pressing long-term challenges for the economy. Broadly speaking, there are three ways to deal with debt: A sovereign default is theoretically possible, but for a country like the US, which has full control over its monetary system, this is extremely unlikely. Default is economically destructive, politically toxic, and would undermine the very foundation of the global financial system, given the role of Treasuries…