When the state's debt growth is unbounded with the feature (not bug) of money printing and suppressed interest rates, eventually that printing and spending outstrips the real economy's ability to extract and utilize resources to generate value; people are unable to produce faster than the currency can inflate. Thus, you then have a net negative economy, where the state's deficits are consuming all newly generated wealth PLUS the wealth generated by previous generations. An inflection point. A country begins to quite literally eat itself alive.

Good platonic philosophy, but it breaks for anyone aware of productivity increases.

Yearly productivity increases are finite. States have demonstrated a remarkable ability to out-debase and out-spend productivity increases, well across history, geography, and cultures.

> where the state's deficits are consuming all newly generated wealth PLUS the wealth generated by previous generations

Why focus solely on the state's deficits? To me, this is exactly the situation we currently have with housing - asset inflation for the past few decades has outstripped real growth, and now housing debt/rent is consuming an ever-growing amount of newly generated wealth.

(The debt/rent payments go to someone else, but the payments on sovereign debt do so as well)

True, but a big part of this is suppressed interest rates, which are a downstream effect of suppressed bond rates. These two effects hold hands: State largess fuels private sector largess.

How is the stock of a private company linked to the debt of its government? There's no working shown here.

Just a hypothesis based on research that has shown around 100b of covid relief money went into the stock market. Like I said originally, maybe correlation != causation. So there is a link to more money printed by the fed inflating asset prices. If that printing stops due to debt to gdp being too high then that could cause asset prices to stagnate.

https://hbswk.hbs.edu/item/did-pandemic-stimulus-funds-spur-....