The years of budget and deficit control were over. Mainstream economists hailed the decisive action of governments in developed nations, committed to spending to boost growth and abandoning the old "austerity" principles.

Only a few years later, The Economist publishes an issue titled "The Coming Debt Emergency," mentioning the enormous deficit and debt problems in France, the United Kingdom, Japan, and the United States.

What happened? How can long-term bond yields rise when central banks are cutting rates? How did government debt lose its place as a reserve asset? Easy. Developed economies' governments of all colours, from Biden and Sunak to Macron and Ishiba, bought the MMT fallacy that "deficits do not matter" and "sovereign nations can issue all the debt they need without risk." Virtually all international bodies hailed statism as the global solution. However, in 2022, global central banks and investors started abandoning sovereign debt as a reserve asset and decided to add gold.

Developed nations have surpassed the three limits of indebtedness: the economic, fiscal and inflationary limitations. When more public debt creates lower economic and productivity growth, the economic limit has been surpassed. When interest expenses and deficits continue to rise despite rate cuts and higher taxes, the fiscal limit collapses. Additionally, when governments become addicted to issuing more debt in any part of the cycle, with diminishing investor demand, inflation becomes persistent.

No one really believes developed nations' governments will control their public finances, and constant tax hikes and excessive regulation have choked the productive economy.

Employment is showing the negative effect of the "triumph of big government". Bloating government spending may disguise GDP but does not create jobs.

Even as government spending continues to artificially elevate headline GDP figures, global labour markets are showing weakness. According to S&P Global's October 2025 PMI Bulletin, the global economy continues to show headline growth, but employment growth has stalled, and productivity improvement has declined sharply.