via theguardian:
Kristalina Georgieva, the managing director of the International Monetary Fund knows it. David Malpass, the World Bank president knows it too. An increasing number of countries are having problems paying their debts, and the crunch point is fast arriving.
Kristalina Georgieva, the managing director of the International Monetary Fund knows it. David Malpass, the World Bank president knows it too. An increasing number of countries are having problems paying their debts, and the crunch point is fast arriving.
The looming debt crisis has been a slow-burn affair, more than a decade in the making. It is not the number one issue under discussion at the annual meetings of the World Bank and the IMF in Washington this week, although if rich countries had fewer problems of their own it would be.
The UN has identified 54 developing economies with severe debt problems. While accounting for little more than 3% of the global economy, they represent 18% of the world’s population, and more than 50% of people living in extreme poverty.
Some countries are spending more on debt interest payments than on health, education and social protection combined, and that is hindering the fight against poverty.
The End of Cheap Currency Money Reveals Global Debt Problem
The global financial crisis of 2008 was supposed to have taught the world the dangers of excessive debt. But borrowing has shot up since then. The debt of governments, companies and households was 195% of global GDP in 2007, according to the International Monetary Fund. By the end of 2020 it had reached 256%. These debt mountains are harder to bear because interest…
Is the economy headed for a doom loop?
The United States is experiencing the highest rates of inflation in 40 years. But unless the U.S. tackles Social Security and Medicare entitlements, the U.S. could face an economic doom loop of out-of-control deficits, ever higher interest rates needed to attract foreign capital, and slower economic growth.
Let’s be clear, in 2022, Social Security and Medicare are Ponzi schemes. They are not self-funding. The two pillars of government entitlements are not subject to the annual appropriations process, instead operating on autopilot. The programs rely on younger workers paying Federal Insurance Contributions Act employment taxes, which in turn are paid out to the rapidly growing population of retired workers. But demographics are destiny. Because Congress will not compromise and enact comprehensive immigration reform legislation, the working population is not large enough to sustain the benefits being paid out to beneficiaries of Social Security and Medicare. The two programs are going bankrupt.