{"id":66385,"date":"2023-12-20T07:23:54","date_gmt":"2023-12-20T12:23:54","guid":{"rendered":"https:\/\/olduvai.ca\/?p=66385"},"modified":"2023-12-20T07:23:54","modified_gmt":"2023-12-20T12:23:54","slug":"the-world-is-sitting-on-a-powder-keg-of-debt","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=66385","title":{"rendered":"The World Is Sitting on a Powder Keg of Debt"},"content":{"rendered":"

The World Is Sitting on a Powder Keg of Debt<\/a><\/h3>\n
\"\"<\/a><\/div>\n

The\u00a0Federal Reserve recently surrendered in its inflation fight<\/a>. But\u00a0price inflation is nowhere near the 2% target<\/a>. Why did the Fed raise the white flag prematurely?<\/p>\n

One of the major reasons is debt.<\/p>\n

The world is buried under record debt levels and the global economy can\u2019t function in a high interest rate environment.<\/span><\/p>\n

Fed officials know that and it is certainly one of the reasons they don\u2019t want to raise rates any higher and hope to bring them down as soon as possible.<\/p>\n

Over a decade of easy money policies incentivized borrowing to \u201cstimulate\u201d the economy. As a result, governments, individuals, and corporations all borrowed to the hilt. That was all well and good when interest rates were hovering around zero, but when central banks had to hike rates to battle the inevitable price inflation, it pulled the rug out from under the borrow-and-spend economy.<\/p>\n

Governments around the world are feeling the squeeze as they try to deal with trillions in debt in a rising interest rate environment.<\/p>\n

According to\u00a0projections by the International Monetary Fund<\/a>\u00a0(IMF) global government debt will hit $97.1 trillion in 2023. That represents a 40% increase since 2019.<\/p>\n

By 2028, the IMF projects that global public debt will exceed 100% of global GDP. The only other time global debt-to-GDP was that high was at the height of the pandemic lockdowns.<\/p>\n

Americans like to brag about being number one. Well, when it comes to debt, they\u2019re right.<\/p>\n

The US national debt makes up 32.4% of the total global government debt.<\/p>\n

According to the IMF, America\u2019s debt-to-GDP ratio stands at 123.3%.<\/p>\n

This chart by\u00a0Visual Capitalist<\/a>\u00a0captures the extent of the problem.<\/p>\n

\"\"<\/p>\n

THE DEBT SPIRAL<\/strong><\/p>\n

Unless governments dramatically cut spending and\/or raise taxes, this debt spiral will only get worse, especially if interest rates remain elevated.<\/p>\n

\u2026click on the above link to read the rest\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

The World Is Sitting on a Powder Keg of Debt The\u00a0Federal Reserve recently surrendered in its inflation fight. But\u00a0price inflation is nowhere near the 2% target. Why did the Fed raise the white flag prematurely? One of the major reasons is debt. The world is buried under record debt levels and the global economy can\u2019t […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[195,303,431,23123,534,13351,18779,3650],"class_list":["post-66385","post","type-post","status-publish","format-standard","hentry","category-economics","tag-debt","tag-fed","tag-interest-rates","tag-michael-maharrey","tag-monetary-policy","tag-price-inflation","tag-schiffgold","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/66385","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=66385"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/66385\/revisions"}],"predecessor-version":[{"id":66386,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/66385\/revisions\/66386"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=66385"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=66385"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=66385"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}