Global debt soars to 275 trillion! Why is global debt so high?

Borrowing is glorious, and borrowing is the best measure to promote economic development and social stability. This is not a joke, but a practice in various countries over the years. The ratio of total debt to GDP in countries around the world is constantly growing. This is not a special case of a few countries, but a common phenomenon in all countries.

So why do so many countries have public debt levels exceeding 100% of GDP? Why does a country's government have such high debt? This still has to start with the methods and reasons for economic development.

There are two ways of economic development: the first is caused by the improvement of labor productivity and scientific and technological progress; the second is caused by the continuous growth of population

Due to these 20 In recent years, the population of developed countries has not experienced explosive growth, or the population growth has been slow or even negative. Therefore, using population growth to develop the economy is no longer feasible.

Since the population method does not work, we can only rely on scientific progress to develop the economy. Unfortunately, the speed of scientific progress in the past 20 years cannot support the rapid economic growth of developed countries. In this case, in order to achieve economic growth, the government must borrow money to invest in industries that the private sector is unwilling to invest. The government hopes to obtain funds through public debt, support the development of social research and basic disciplines, and stimulate the economy through government investment. , what achieves long-term and near-term development is balance. After all, only when society develops can full employment be achieved and the entire country be stable. This is an important reason why public debt in developed countries has continued to rise in the past 20 years.

In addition, we can also see that global interest rates, especially those in developed countries, have been on a downward path in the past 20 years, and interest rates in Japan and Europe have even been negative. After the COVID-19 epidemic, the United States also lowered the federal benchmark interest rate to zero in order to stimulate economic development. Low costs greatly reduce the pressure on the government to raise funds to repay debts. Therefore, even if the debt continues to grow, the pressure on the government to repay the debt may not be much greater than before.

Of course, the debt you borrow must be repaid in the end, but this method of exchanging time for space may not be a solution. This latest approach has a new school of thought in the field of economics called the Modern Monetary School.