No, we can’t borrow our way out of this!

Excessive borrowing to finance a rapid green transition could severely damage the economy through high inflation.

Obtaining massive loans to be repaid over centuries may appear attractive as a way to tackle global challenges. In reality, this mistake has fooled many countries into excessive borrowing—whether by their central bank or through the sale of Treasury bonds—to expand public spending without corresponding gains in real economic productivity. This approach ultimately leads to inflation when the supply of money grows faster than the production of goods and services.[1]

A healthy economy is ultimately built on work and production, not on the “monetary illusion” of printing money. It is a dangerous misconception to believe that borrowing alone can finance the production of green goods that do not yet exist.

Borrowing cannot sustain the import of clean energy and green products indefinitely and would eventually weaken the currency on foreign exchange markets.

While limited borrowing to finance imports is feasible, there is no guarantee that foreign corporations will produce green products without contributing to greenhouse gas emissions.

Excessive reliance on borrowing could even lead to a currency collapse, making imported goods prohibitively expensive for both rich and poor households and ultimately destabilizing the economy.

Public borrowing can help overcome a short-term crisis, but it cannot sustain the long-term investment required to build a new clean-energy infrastructure.

Borrowing within certain limits is feasible, as governments often operate with a sustained, manageable deficit. Such borrowing can even be increased for a short time during an economic crisis. However, borrowing trillions over decades to address every societal issue would be counterproductive. Such extensive borrowing would lead to significant currency devaluation and uncontrolled inflation, thereby derailing the economy and disproportionately impacting the poor.[2]