Earlier today, I spilled quite a bit of pixels explaining why very high rates of public debt constrain economic growth. It occurs to me that a simplified version might help.
When government debt grows beyond 90 percent of GDP, people and businesses get worried. This leads to a private sector contraction.
This is why I call it a debt trap. Government borrows to replace declining private demand, which leads to further declines in private demand.
Questions? Comments? Email us atNetNet@cnbc.com
Follow John on Twitter @ twitter.com/Carney
Follow NetNet on Twitter @ twitter.com/CNBCnetnet
Facebook us @ www.facebook.com/NetNetCNBC