Contrary to Jones’ assertion that debt will become unmanageable, debt rollovers are a standard practice for governments with large borrowing needs. The U.S. Treasury regularly issues new debt to refinance maturing obligations, spreading repayment costs over time. Historical data shows that even when debt levels rise temporarily, they can stabilize through economic growth, moderate inflation, and fiscal adjustments.
A research paper by Paul Goldsmith-Pinkham suggests that higher debt levels do not inherently raise fiscal costs. As long as real interest rates remain below the economy’s growth rate, governments can roll over debt without increasing the debt burden. This scenario has played out in the U.S. in recent years, with strong post-pandemic growth helping to offset the cost of higher borrowing.