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Government debt as a percentage of GDP now exceeds 100%. The only time it was higher was in 1950 as the world rebuilt after World War II. Now, the debt is so high because countries are continuing to try to stimulate the economies. Unfortunately, with low inflation and low interest rates, businesses are finding it more profitable to make money by borrowing money, reinvesting it in financial instruments, and saving the profits. Previously, the investments were in their businesses, which would eventually grow the economy. Now, companies have little incentive to invest, a self-reinforcing expectation that economies won’t grow, and governments are left with few options. Negative interest rates seem to be one of the few remaining tools to employ, therefore they’re being employed, but there is no consensus on their long term effects. In the meantime, debt rises.

(Click on the graph for the link.)

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The Link Between Public Debt And Taxation” – World Economic Forum

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One thought on “Governments Reach Record Debt

  1. Pingback: Data That Matters September 2016 | Pretending Not To Panic

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