Magellan chief investment officer Hamish Douglass says politicians might as well believe in the tooth fairy if they think high levels of government debt is sustainable, and predicted a day of reckoning for future generations saddled with paying it off.
Mr Douglass told investors tuned into the company’s markets update on Tuesday that governments acting on short-term interests were misguided as heavy debt had long-term ramifications.
“If you believe debt is free and debt has no consequences, you might as well believe in the tooth fairy,” Mr Douglass said.
“What worries me, the problem is the longer this goes on, more and more politicians might start believing in the tooth fairy. And because they have relatively short election cycles, what are the restraints on them to just spend the money today and believe it’s just a free lunch?”