Global debt now exceeds $100 trillion, according to the Bank of International Settlements. Over the past five years, debt has increased by about $30 trillion. What’s more, governments have been the largest issuers.
Low interest rates have attracted governments to the appeal of using debt to fund public projects today. As the saying goes, there’s no such thing as a free lunch. At some point this debt is going to become due. At best all these governments have done is shifted expenditure forward by taking from future generations and giving to the present ones.
The magnitude of the indebtedness is what is striking. The $30 trillion of new debt issued over the past five years represents the full output of the American economy for two years. Even ignoring interest payments (which even at low interest rates are fairly hefty on $30 trillion of principal), this is a phenomenal obligation to have to pay back.
. . . .
Over the last five years the press has been full of discussions of austerity. Allegedly, governments have scrimped and saved to get by. Now we find out that we are collectively $30 trillion more in the hole compared to where we were when the recession began? If this is austerity, I’d hate to see the alternative.
(H/t Tom Woods on the Peter Schiff show.)
The gloom and doom crowd will note that a global debt of $100 trillion is $14,000 for every man, woman, and child in the world — including countless millions of Africans who live on less than two bucks a day, for whom $14,000 represents the sum they could live on for 30 years. The gloom and doom crowd thinks such sums cannot be repaid, and never will be repaid.
I guess the gloom and doom crowd never heard of this:
I have one of these at the office. Problem solved, pessimists.