For financial authorities, it is and will always be about the financial system as a whole and that whole has to be appreciated as being more than the sum of its parts. We also talk about how we can be better, addressing some of more immediate challenges that have come up because of Covid.
These scenarios suggest that, under a range of reasonably plausible assumptions about spending and taxes, we could be in a situation in the decades ahead in which rapid increases in the unified budget deficit set in motion a dynamic in which large deficits result in ever-growing interest payments that augment deficits in future years.