Canada is heading into a period of higher debt that could exhaust the federal government’s taxation and borrowing capacity, reduce its credit rating, and trigger a financial crisis similar to the one seen in the 1990s, according to Simon Fraser University economics professor Herbert Grubel.
“You can’t pile on debt forever. There must be a critical point at which people who are lending you money say, ‘we don’t trust that you can repay it,’ and you get into a crisis,” Grubel told The Epoch Times.
Grubel recently warned in a recent Financial Post op-ed that Canada is heading into a “1990s-style fiscal reckoning” due to unsustainable debt levels. He forecasted in his Dec. 4 article that if the trend continues, the government’s taxation and borrowing capacity will become exhausted and revenues won’t cover the cost of running the government and paying interest on the debt, and could even lead to bankruptcy.
