Commentary
Global debt levels soared by $8.3 trillion in the first quarter of 2023, climbing to $305 trillion, nearly the record high set in the first quarter of 2022, according to the Institute of International Finance. This means almost 335 percent of GDP.
Rising debt is a burden on growth, and soaring public debt means higher taxes, weaker productivity, and declining real wages as governments push inflationary policies to try to dissolve part of their enormous indebtedness.
Public debt is not a reserve asset for the public sector; it is a negative factor that crowds out investment and credit and erodes purchasing power from families and earnings from businesses as taxes rise. To make public debt a reserve asset, it would have to generate real economic return, just as is the debt of private businesses used for solid investments. However, governments use increasing debt for current spending with no real economic return, and this leads to lower growth trends and loss of purchasing power of its issued currency….