Vast government debts are riskier than they appear
A provocative new paper gets central bankers talking at Jackson Hole
![Illustration of a thumb pressing down on a U.S. coin against a solid beige background. The coin is cracked, and blue liquid appears to be leaking out from the crack.](https://www.economist.com/cdn-cgi/image/width=1424,quality=80,format=auto/content-assets/images/20240831_FND000.jpg)
At the annual gathering of central bankers in Jackson Hole, Wyoming, attendees enjoy R&R: research and recreation. The latter usually involves a pleasant hike by the lake, but last year a rainstorm soaked the assembled economists. When they returned on August 23rd a remarkably accurate weather forecast helped them dodge a shower and enjoy some sun. This was apt. A year ago inflation was still too high and investors were placing bets that interest rates would have to stay “higher for longer”, the economic equivalent of a drenching. This year inflation looks all but subdued and central bankers—whose optimistic prognostications have also come to pass—have started cutting interest rates.
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This article appeared in the Finance & economics section of the print edition under the headline “Storm-proofing”
Finance & economics August 31st 2024
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