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IPFS News Link • Economy - International

Not Just The US: Global Debt-To-GDP Ratios Are Skyrocketing

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And while America is among the top contributors, it isn't just the US that's spending money it doesn't have: after briefly declining in 2023, the global debt-to-GDP ratio is again at an all-time high.

Even though interest rates are still extremely low by any free market standard, with even modestly elevated interest rates in the US, payments on servicing the debt skyrocket. This blows up the national debt balloon even bigger. With zero chance of Washington reigning in spending anywhere near enough to keep up, the interest can only be paid with even more borrowing.

The largest quarterly increases were unsurprisingly in the US and Japan, and these are a couple of the most indebted national economies overall. But emerging markets are now along for the ride, with some of the largest debt-to-GDP ratio increases this year coming from the likes of China, India, Brazil, and Mexico. Along with Thailand and Korea, China's ratio of consumer debt to GDP is still above pre-COVID levels.

In any event, 2023's debt-to-GPT ratio decline was not due to countries spending more responsibly. It was due to inflation, which can have the effect of boosting nominal GDP, because it increases the total on-paper value of the goods that a country produces, and makes tax revenues appear artificially higher.

But while inflation makes prices go up, it doesn't increase the real, lasting value of an economy. It also steals purchasing power from savers, which can only be spun as an economic positive in a world like ours, ruled by the Keynesian perversion of fiat central banking. The whipsaw effect of monetary policy never truly addresses the root of any problem it attempts to solve. It requires fallible humans with limited information, limited tools, and endless biases to attempt to micromanage a system of near-infinite complexity.