The key question is how inflationary that post-pandemic boom will be. Most economists seem to agree with Furman and Summers that secular stagnation is here to stay. Charles Goodhart of the London School of Economics is one of the few to predict a “surge of inflation” as soon as next year. If he is right, the promised debt-funded free lunch could turn out to be a very expensive dinner.

While I doubt Goodhart’s prediction that inflation might rise to 5% next year, inflation can come at you fast, as my Bloomberg colleague John Authers pointed out last week. The U.S. housing market has roared back. Home equity withdrawals have soared. Bank deposits are way up and household debt-service ratios are at all-time lows. We are heading for a roaring 2021, if not the full Roaring Twenties. With a weak dollar and rising commodity prices, inflation might just give the Fed a fright.

I am not a macroeconomist; I am a mere economic historian. To me, past experience is more compelling than any model. The lesson of history is indeed that there is no correlation between debt-to-GDP ratios and long-term interest rates, just as there is no simple relationship between the size of central bank balance sheets and inflation.

But history also teaches us that debt and power are connected: A great power or empire that accumulates too high a mountain of debt and fails to keep growth ahead of debt service is destined to decline. The Bourbons, the Ottomans and the British all learned this hard lesson. So the post-pandemic debt dynamics matter not just for markets but for geopolitics.

In a new book published in online installments, “The Changing World Order,” Bridgewater Associates LP founder Ray Dalio argues that the U.S. is in the wrong stage of classic debt cycle. “When the government runs out of money (by running a big deficit, having large debts, and not having access to adequate credit) it has limited options,” he writes in chapter 9:

It can either 1) raise taxes and cut spending a lot or 2) print a lot of money, which depreciates its value. Those governments that have the option to print money always do so because that is the much less painful path, but it leads investors to run out of the money and debt that is being printed. Those governments that can’t print money have to raise taxes and cut spending, which drives those with money to run out of the country, state, or other jurisdiction because paying more taxes and losing services is intolerable. If these entities that can’t print money have large wealth gaps among their constituents, these moves typically lead to some form of civil war/revolution. This late-cycle debt dynamic is now playing out in the United States.

Scary stuff. And, to judge by an essay written by Guo Shuqing, chair of the China Banking & Insurance Regulator Commission and party secretary of the Chinese central bank, Dalio has influential readers in China, the inexorable rise of which is the other big theme of his book.

Still, I am old enough to remember Paul Kennedy’s argument in “The Rise and Fall of Great Powers” that the total U.S. federal debt in 1985 (then a mere 35% of GDP) was a sign of impending American overstretch reminiscent of “France in the 1780s, where the fiscal crisis contributed to the domestic political crisis.” What followed instead was the collapse of the Soviet empire and American triumph in the Cold War, not to mention Japan’s lost decades.

Most commentators are ending the year bullish on China — the only major economy that grew this year, and forecast by the OECD to grow by 8% next year. China’s gross public debt will be just 62% of GDP this year, less than half the U.S. figure.

But it is private debt that worries Chinese officials such as Guo and Vice Premier Liu He, not public debt. Since President Xi Jinping came to power in November 2012, according to the Bank for International Settlements, credit to households has doubled as a share of GDP to 59%, while credit to non-financial corporations has jumped by 38 percentage points to 162%.