Ken Rogoff, Harvard Economics Professor, former Chief Economist of the IMF
https://www.powerlineblog.com/archives/2025/04/ken-rogoff-our-dollar-your-problem.php"It is not easy being an economic conservative at most American universities. A 2023 Harvard Crimson poll found that only 3% of Harvard’s faculty identified as conservative, versus 45 percent liberal and 32 percent very liberal.
Earlier in my career I taught at Berkeley, where I was the only Republican in the entire economics department. I have been widely attacked by progressives for daring to think that while debt-financed stimulus can sometimes be a good thing, the benefits always need to be weighed off against the long-run costs. High public debt is not the veritable free lunch so many academics now think; the dollar’s position in the global monetary system gives some extra rope but not an infinite amount.
Believe it or not, even today, mine remains a distinct minority view. You can find endless articles in the top economics journals, not to mention the Financial Times and other newspapers, on how great it would be if the Federal Reserve seeded the economy with transfers or “helicopter money” which is one way to enjoy the supposed free lunch.
Incredibly, the risks of public debt have long become a virtually taboo subject among academic economists. When I tell top young researchers it might be a real problem now, they often intimate that this view is “so 1990s”. You would think public debt would be an active topic of research among young economists, but evidently not. If one looks at the paper titles and session titles at the American Economic Association meetings in 2024, the words “debt” or “deficits” do not appear in the top 25 words in paper or session titles, as Hoover economist Joshua Rauh shows in a Substack post.
Instead, leading words include race, gender, inequality, etc. This does not surprise me since despite being one of the top dozen most cited economists (in academic books and papers), I have never succeeded in getting a session on debt into the meetings, which are curated by officers of the American Economic Association. (I have been in sessions on other topics.) If the reader is wondering why so many economists don’t care about public debt anymore, it is basically because there is a widespread belief that ultra-low interest rates will last
forever, with the high real (inflation) interest rates of the past few years marking but an
“aberration” that will eventually disappear like waking up from a bad dream.
Of course, if the government does not need to make any interest payments to keep its debt to income ratio constant, there is never going to be any pressure, and debt can just keep going up forever. And anyone who argues otherwise is labelled an “austerian” who fails to understand that the government could make many things free if only it had the courage to issue more debt. How inconvenient it must be stimulus fans that interest payments on US debt have nearly tripled over the past few years, and are now reaching a trillion dollars per year.
My own professional work has always emphasized the need to look at very long data sets, a century or more, before reaching the conclusion that “this time is different” And anyone looking at long cycles in debt and interest rates would never, ever, buy into the notion that the government can just keep running up debt forever with no cost. This is not an argument against stimulus or tax cuts; it is just that one cannot deny the long-run costs.
My new book, forthcoming on May 6, Our Dollar, Your Problem: An Insider’s View of Seven Turbulent Decades of Global Finance, provides historical context to the dramatic changes unfolding today in the global monetary system, and foreshadows risks to macroeconomic and financial stability that appear to be unfolding even faster than I expected. I would not quite say its “Ken Rogoff unplugged” but it was extremely gratifying to go be in a position to go hard in places at the nutty views that have dominated the debate, and hopefully convince economists and policymakers to listen to another view. Earth to progressives: cancel culture is not going to pay off US debt.
There are many reasons that I believe we have already passed peak dollar dominance, but a leading one is my view that our debt trajectory is unsustainable, as long-term interest rates have reverted to trend post financial crisis and post pandemic. Over the past twelve years, I have debated the point around the world with many of the very top progressive and center-left economists including Larry Summers (former Treasury Secretary and president of Harvard), Paul Krugman (Nobel Prize winner who until recently wrote for the New York Times) and Olivier Blanchard (former president of the American Economic Association).
Among academics, almost no one else took my view. Now that interest rates have soared, the (almost) free lunch view on debt is starting to look at lot more dubious, to say the least. (Of course, a tariff-induced recession will bring down interest rates, but only temporarily, and tax revenues will fall even more.)
I am used to waiting out very extensive periods when my views based on long data sets run far outside of consensus – until suddenly they are not. In the book, I try to be balanced equally critiquing conservative and progressive economic views. Unfortunately, it is hard to give balance when the overwhelming majority of economists are progressive or center-left. Donald Trump is, of course, his own category, but I view him more as an accelerant than the cause of today’s dollar malaise."
