Day by day Quote by Yanis Varoufakis
““In reality, states never repay their debt. They roll it over, meaning they defer repayment endlessly, paying only the interest on the loans. As long as they can keep doing this, they remain solvent. It helps to think of public debt as a hole in the ground next to a mountain representing the nation’s total income. Day by day the hole gets steadily deeper as interest accrues on the debt, even if the state does not borrow more. But during the good times, as the economy grows, the income mountain is steadily getting taller. As long as the mountain rises faster than the debt hole deepens, the extra income added to the mountain’s summit can be shovelled into the adjacent hole, keeping its depth stable and the state solvent. Insolvency beckons when the economy stops growing or starts to contract: recession then eats into a country’s income mountain, doing nothing to slow the pace at which the debt hole continues to grow.””
About This Quote
Source Speech: Economic Forum, 2015
Governments can postpone debt repayment indefinitely by paying only interest, staying solvent as long as economic growth outpaces debt accumulation.
In simple terms: States survive debt by growing income faster than debt interest.
Key Takeaway
Focus on sustainable growth to manage debt.
Themes
economics
public finance
debt sustainability
Mood
analytical
concerned
Type
explanatory
policy‑oriented
When to use this quote
- budget planning
- policy making
- economic forecasting
- debt management
Key Concepts
fiscal policy
interest dynamics
growth vs debt
Questions to Reflect On
- How can economies sustain growth to offset debt?
- What risks arise if growth slows?
A Different Perspective
Growth may stall, making debt unsustainable.
