Two quick thoughts on Pettis. Higher debt is not just about reduced demand, It is also especially attributable to higher medical spending deriving from Medicare and Medicaid, each of which has contributed to absorbing increasing shares of government revenues. Second, Ragharam Rajan articulated a good summary of your point about alternatives to sovereign debt; it was AAA mortgage debt during the GDC. See his book "Fault Lines", perhaps the best book on the causes of the GFC.
Thank you, great post and insights re McKinsey & SIVB
Two quick thoughts on Pettis. Higher debt is not just about reduced demand, It is also especially attributable to higher medical spending deriving from Medicare and Medicaid, each of which has contributed to absorbing increasing shares of government revenues. Second, Ragharam Rajan articulated a good summary of your point about alternatives to sovereign debt; it was AAA mortgage debt during the GDC. See his book "Fault Lines", perhaps the best book on the causes of the GFC.