If you consume more and more with borrowed money year after year, the debt eventually becomes so large that not even the SMS loan sharks want to know about you. But the United States has been able to build on debt relief since the 1990s without being penalized. Have the old economic laws of nature ceased to apply, or will the White House also get a call from "The Luxury Trap" in the end?

The deficit in US government finances in 2019 is expected to be about one trillion - one million million dollars. New record. Again. Trump had a cocky election promise in 2016, when the national debt was up to 19 trillion: to bring it down to zero. The central government debt is now over $ 22 trillion. Businessman Trump built his real estate empire with the help of high leverage and proudly called himself "the king of debt" in an interview before the election. Today he is president of the world's largest government debt.

Once upon a time, most politicians agreed that a budget should be in balance, and concerns over US government debt were recurring. No longer. Both Democrats and Republicans have released the state-funded chastity belt and are shopping on chalk like it would not be tomorrow. Republicans by lowering taxes, Democrats by raising spending. Without anyone seeming to care about matching with corresponding cuts or tax increases to get the budget together.

Historically low interest rates

But maybe they do it right? Perhaps it is old-fashioned to think that "he who is in debt is not free"? Earlier this year, former IMF chief Olivier Blanchard said high government debt may not be so stupid anyway. It was like hearing the pope talk porn. After all, the IMF usually demands tough budgetary discipline from the countries they grant emergency loans. What happened?

The historically low interest rates!

They have not only got us private individuals to borrow as never before, now also finance ministers around the world are sitting with the feeling that it is important to take the opportunity to borrow now when it is basically free.

"As long as interest rates are so low, there is no threat to government finances to borrow much," says John Hassler, professor of economics at Stockholm University.

So why should a state in its current state, with such low interest rates, still care about keeping a budget in balance?

- Well, that's because you can't still borrow as much as you can. We do not know where the limit goes when the lenders lose confidence that they will be able to repay the debt, but it is there. For Sweden, a smaller country, maybe that limit is somewhere at 100% of GDP.

Today, Sweden's national debt is 25% of GDP, internationally a very low debt. And Hassler suggests that Sweden should increase government debt by 30% and invest the borrowed money in equities, in an international index fund, to get a free return on the money.

- The Swedish Treasury would thus receive a supplement of approximately SEK 50 billion a year from the development of the shares. Right now, it would cost nothing but us to take a little more risk, Hassler says.

A ticking bomb

In such cases, it is about borrowing to invest. But Cecilia Hermansson, economist at KTH, does not think one should speculate on the state's money in this way.

- If the state is to borrow, it is other types of investment that also yield returns, but of a more traditional kind that strengthens society such as infrastructure, climate change or education that one should invest in.

In the US, government debt does not increase for investment, but primarily for consumption.

- Some call it a ticking bomb, but it doesn't have to be triggered if you get started on time raising taxes or lowering expenses to get the budget together, Hermansson says.

The politicians there do not seem so sucked on it, is it time for the country to apply for the "Luxury Trap"?

-In such cases, many countries need to queue up for the program. The US could cut government debt but choose to increase it even in good times, like now. This way you can say that they are stuck in the luxury trap.