The age of financial repression

Following his re-election, US President Barack Obama almost immediately turned his attention to reining in America's rising national debt. In fact, almost all Western countries are implementing policies aimed at reducing - or at least arresting the growth of - the volume of public debt.

In their widely cited paper, Growth in a Time of Debt, Carmen Reinhart and Kenneth Rogoff argue that, when government debt exceeds 90 percent of GDP, countries suffer slower economic growth. Many Western countries' national debt is now dangerously near, and in some cases above, this critical threshold.

Indeed, according to the Organization for Economic Cooperation and Development, by the end of this year, the United States' national debt/GDP ratio will climb to 108.6 percent. Public debt in the eurozone stands at 99.1 percent of GDP, led by France, where the ratio is expected to reach 105.5 percent, and the United Kingdom, where it will reach 104.2 percent. Even well disciplined Germany is expected to close in on the 90 percent threshold, at 88.5 percent.