Global Economics: US public debt as a share of GDP is now higher than at any other time in history except after World War 2 - and rising: US economists of investment bank Morgan Stanley, expect public debt to GDP to increase to 87% by 2020. MS says how policymakers will deal with this fact will likely be one of the main drivers across markets going forward. It asks what are the implications of high public sector debt for fiscal sustainability and inflation? To answer this question, MS looks at how the US economy escaped high debt following World War 2. It then quantifies the inflation risks inherent in today's US fiscal position by asking what would happen if policymakers were to deal with the current debt overhang in the same way.