How much debt is too much? After three economic shocks in a row – the financial crisis, the pandemic and the energy price spike – the world economy is drowning in the stuff, with little sign of any life raft to the rescue.

It’s true that, relative to GDP, we’ve seen still higher levels of public debt in the past, the last such occasion as a result of the Second World War. It’s also true that the Japanese economy has managed to coexist with debt to GDP of more than 200pc reasonably well for many years now.

But don’t let these much quoted examples of “debt doesn’t matter” lull you into a false sense of security. High wartime debt was tolerated because everybody knew that military spending would fall significantly the moment the war was over.

What’s more, the post-war years saw an explosion in economic growth, together with the demographic dividend of a baby boom that greatly expanded the size of the workforce.

From the fall of the Berlin Wall onwards, moreover, Western economies enjoyed a pronounced “peace dividend”; defence spending plummeted as a percentage of national income.

No such benign combination of forces is in prospect this time around.

To the contrary, ageing populations threaten only to further dial-up the pressures on public spending. Growing geopolitical instability has meanwhile brought the post-Cold War peace dividend to an end.

As for Japan, there are countervailing factors in play, in particular very high levels of domestic savings and a usually buoyant current account surplus.

Historically, the tax burden in Japan has also been lower than other major high income economies, though it has admittedly crept up in recent years; in any case, there is a sense in which Japan borrows from its citizens rather than taxes them.

Throughout much of the rest of the world economy, we are both taxing more and borrowing more in equal measure. For how much longer can this continue?

There’s a particularly alarming graphic in the International Monetary Fund’s latest “Fiscal Monitor” which shows that, on unchanged policies, federal debt in the United States will soar over the next 30 years to around 160pc of GDP.

It’s even worse for China, where debt is projected to rise to 250pc of GDP. Nor does there seem to be any political appetite for reversing these trends.

If there is one thing that unites both candidates for November’s presidential election in the US, it is a complete disregard for high levels of deficit spending.

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