Technology companies linked to Artificial Intelligence (AI) are contributing to the inflation of global debt, which is already approaching $346 trillion, or 310% of GDP, according to the…
Just remember that every year the World’s Economy has to grow enough to cover the interest rate payments in all outstanding debt.
There are two ways to offset this:
Reduce the amount of outstanding debt.
Lower interest rates (which is what was done after the 2008 Crash, leading to the slowest recovery from a Crash in at least a century) so that for the same amount of debt there is less interest to pay.
Overall debt is increasing as per the article.
Interest rates are below historical average since what was done after 2008 which was supposed to be temporary wasn’t fully wound back, so there’s a lot less room there for central banks to do something about it.
Actually solving the underlying problems behind the 2008 Crash was pushed to the Future with some interest rate engineering, and it looks a lot like The Future Is Today, and this time around rather than just an over-indebtness plus Finance overextension problem, we seem to have over-indebtness, a massive Tech bubble (like in 2000) AND asset price bubbles in all manner of asset classes, from economically peripheral things like crypto to core things like housing.
I’ve been expecting a massive crash since I saw what passed for a “solution” back in 2009-12, but shit is turning up to be way worse than I expected due to all the additional resource malallocation and mispriceing in the Economy.
Almost a decade in Investment Banking and I started reading a lot about Economics (from books, not random websites) after the 2008 Crash to try and understand what the fuck had happenned and what was being done about it.
That said, take what I wrote with a large pinch of salt, especially the first part which is an idea that I have of how that part of things work (based on Mathematics and Finance industry knowledge), not a proper peer reviewed theory from Economics.
Just remember that every year the World’s Economy has to grow enough to cover the interest rate payments in all outstanding debt.
There are two ways to offset this:
Overall debt is increasing as per the article.
Interest rates are below historical average since what was done after 2008 which was supposed to be temporary wasn’t fully wound back, so there’s a lot less room there for central banks to do something about it.
Actually solving the underlying problems behind the 2008 Crash was pushed to the Future with some interest rate engineering, and it looks a lot like The Future Is Today, and this time around rather than just an over-indebtness plus Finance overextension problem, we seem to have over-indebtness, a massive Tech bubble (like in 2000) AND asset price bubbles in all manner of asset classes, from economically peripheral things like crypto to core things like housing.
I’ve been expecting a massive crash since I saw what passed for a “solution” back in 2009-12, but shit is turning up to be way worse than I expected due to all the additional resource malallocation and mispriceing in the Economy.
thanks for that comment
what did you study to be able to trace these?
Almost a decade in Investment Banking and I started reading a lot about Economics (from books, not random websites) after the 2008 Crash to try and understand what the fuck had happenned and what was being done about it.
That said, take what I wrote with a large pinch of salt, especially the first part which is an idea that I have of how that part of things work (based on Mathematics and Finance industry knowledge), not a proper peer reviewed theory from Economics.