China, the U.S., U.K., Brazil, Japan, South Africa, and Turkey are likely to increase their national debts by five percentage points of GNP from now through 2028, Vitor Gaspar, policy director of the International Monetary Fund, said last week in comments quoted by the Financial Times.
“By the end of 2028, public debt in the world is expected to reach almost 100 percent of GDP,” he noted, adding that the rise was heading “back to the record levels set” during the COVID War.
China and the U.S. are driving the global increase but financial markets are imposing no discipline on them, Gaspar pointed out.
“Eventually, policies will have to change to bring debt back down to Earth,” he added, “but the two largest economies in the world have capacities and resources that most others lack.
“Fiscal tightening can help by moderating the growth of aggregate demand and, therefore, contribute to more moderate increases” in central banks’ interest rates, he said.
That would “ease pressures on the financial system” imposed by sharply higher borrowing costs that began a year ago and are ongoing.
TREND FORECAST: Again, most of what has occurred was self-imposed when governments poured in countless trillions of dollars to fight the COVID War. And now as U.S. interest rates go up so too will the value of the dollar, and the higher the dollar rises the lower other currencies will fall. And since so much of this debt is dollar based it will cost a lot more to pay off their debt, thus making a bad situation worse.
And as economic conditions decline civil unrest, protests, crime, violence and government corruption will escalate.