U.S. debt has increased by $330Bn since the start of the year, to a staggering $34.3Tn. That is roughly 125% of gdp. If we look at global levels of debt, in the chart below, we can see that it has reached $313Tn and it’s at historical all time high. In relative terms to global gdp, however, it has come down to 330% of global gdp since 2021. That is called financial repression: When inflation runs high, nominal gdp outgrows debt, becaue debt does not grow with inflation. As a result, even though debt has increased substantially, the ratio has come down. But if central banks around the world start to control inflation and it stabilizes around 2%, and real gdp growth continues to be anemic, the ratio will increase again. The world has a debt problem.
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