This raises the question, how can such accumulation be sustained and what happens when it stops? Conversely in a downturn: very large public-sector deficits are made inevitable by the private-sector’s return to net saving. But how long will public policymakers, unaccustomed to thinking about these relationships, tolerate those deficits? The question is important, since if for political reasons they do not, the economy may collapse. On the international side, the willingness of foreigners to hold US govern- ment bonds as reserve assets creates a counterpart in the . public deficit: . budget deficits are inevitable so long as the world wishes to add to its reserves of Treasury bonds
