Global debt is fuelling the rise [relative to all other fiat currencies] of the $US. Meanwhile the purchasing power of the $US dollar is in swift decline. The common factor in this remarkable state of money is global debt [see photo]. Global debt was not caused by the shutdowns during the Covid-19 pandemic. It was not caused by the Ukraine war. It was not caused by the global financial crisis of 2008. However all these events have raised global debt levels.
Global debt is hard to define in precise money terms but some estimates put it as high as $US 300 Trillion. Incidentally Russia [17% of GDP] is one of the least indebted nations on Earth and Japan is one of the most indebted [257% of GDP]. And global debt is reaching crisis levels in many developing nations as they struggle to repay their accrued debts.
The crushing impact of global debt for you comes in many shapes and sizes and perhaps least of all is the impact of a global recession or depression. Global debt is depressing the supply side of the economic equation. In real terms it is suppressing GNP growth. It is retarding global investment levels in private sector innovation and expansion. However it is increasing the growth of the public sector spending [this was most noticeable during the Covid-19 pandemic]. The immediate impact on you is consumer inflation [rising prices of food, energy, housing, education, etc]. Rising interest rates will impact you if you are carrying personal consumer debt in 2022 [credit cards, student loans, car repayments, mortgage costs, etc]. Restricted employment opportunities will arise as both private and public institutions use automation to restrict their exposure to bloosuming debt levels. In the short-term you can expect this global debt overhang will result in asset deflation [stocks, houses, etc]. The impact of asset deflation will disrupt most household balance sheets.
Global debt levels may remain invisible for you however the crushing impact on you will be just as severe as for everyone else. Cost of living rises, values of homes decline, living wage opportunities shrink, indebtedness increases, and so on and so.
Richard.
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