Debt Will Not Disappear: Safe-Asset Demand, Rollover Risk, and Macrofinancial Regime Shifts in Advanced Economies

Debt in advanced economies is often framed as a temporary imbalance that fiscal consolidation and growth will ultimately "solve." This paper argues instead that debt persistence is structural: sovereign debt supplies a macrofinancial infrastructure-safe, liquid collateral and benchmark pricing-while political-economy forces and recurrent shocks sustain deficit bias. Building on Henry Kaufman's macrofinancial insight that debt risk depends on the architecture that sustains it, we propose a parsimonious regime-shift framework in which standard debt arithmetic (r-g and primary balances) is necessary but insufficient for assessing fragility. We model transitions from a benign liquidity regime to a stressed regime as a function of (i) maturity/rollover exposure, (ii) liquidity-collateral conditions, (iii) investor base composition, and (iv) the sovereign-bank nexus. The framework yields falsifiable hypotheses (H1-H6) and a fully implementable empirical design using standard crosscountry data to estimate stress probabilities and regime transitions. Policy implications emphasize resilience-maturity management, macroprudential tools against procyclicality, and credible medium-term fiscal anchors-rather than unrealistic "zero-debt" narratives.