The issue of debt is based on three aspects - identifying the causes of built-up of debt, enhancing its productive and allocative efficiency, and then retiring debt, or debt servicing. In all of these aspects, Neoliberalism, austerity, pro-cyclical policy, existential threats, and democracy are the key underlying determinants feeding into the issue of debt. Dealing sustainably with debt requires appropriately addressing these determinants.

Neoliberal policy called for low and diminishing role of public sector to become mainly the facilitator of private sector, and low-level regulator markets, reacting only to market failures. This not only resulted in over-profiteering of big market players feeding into cost-push inflation, and denting private investment, hurting economic growth, along with revenues, and exports and, in turn, capacity to repay debt and widening gap to fill with new debt.

Born out of the over-board role of aggregate demand in controlling inflation, this view of neoliberal policy gave way to over-board practice of monetary, and fiscal austerity policy which, in turn, hurt public investment, producing negative consequences of growth, its distribution, and weakened the relationship of public opinion on public policy, which overtime got more influenced by moneyed interest.

In the meantime, higher cost of capital not only fell a lot short of controlling inflation – more so, over the medium- to long-term – since lacking role of government........

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