Photo credit: Asean post
Governments worldwide owe a whopping $91 trillion, which is equal to the size of the global economy.
CNN reports that, in part, due to the cost of the pandemic, debt burdens have grown so high that they now pose a growing threat to living standards. It is reported that even prosperous economies are not smiling.
It is surprising that, in a year of elections around the world, politicians are ignoring the problem. They are unwilling to tell voters the truth about tax increases and spending cuts needed to tackle the deluge of borrowing. Rather than do that, some of them are making promises that could create more inflation.
The International Monetary Fund last week warned that “chronic fiscal deficits” in the US must be “urgently addressed”.
As debt burdens envelop the world, investors are growing anxious.
Kenneth Rogoff, an economics professor at Harvard, said, “In the 2010s, a lot of academics, policymakers and central bankers came to the view that interest rates were just going to be near zero forever, and then they started thinking debt was a free lunch.”
He said their assumption was wrong.
Putting off efforts to rein in debt leaves governments vulnerable to far more discipline by financial markets
