Planet Money · Saturday, October 31, 2026
Economist Olivier Blanchard discusses how low interest rates in past decades led many advanced economies to abandon traditional limits on national debt, such as the old rule capping debt at 60 percent of GDP. Blanchard points out that while high debt can be sustained through economic growth and debt rollovers, unexpected shocks like COVID-19 and rising interest rates have brought renewed danger.
“Back in the 1990s, economists like to say that if you are a country with an advanced economy, then your national debt shouldn't exceed 60 percent of GDP. That was considered the upper limit of safe.”
“Turned out to be a mistake. I had not anticipated COVID. I had not anticipated Ukraine. I had not anticipated Iran. I had not anticipated AI. I do apologize for all that.”