Big Nations, Bigger Debt: Why Global Borrowing Is a Serious Threat

📆This Week’s Topic

This week we will be talking about debt in large countries. For the longest time crushing debt have been a real problem for smaller poorer countries, but now the large ones are the ones who have the biggest and most crushing debt. There has been record debt in the US, UK, France, and Japan. With the US sitting at $36 trillion and many countries sitting near it could cause global financial instability.

💳 Cause & Effect

Because the debt in these countries is sky high, its money that could have been used on public services, social security, or other government programs are now being used on interest payments. Another risk is that this debt could have is in a case of a emergency like a pandemic borrowing could not be done at these scales due to the amount of debt the country already has.

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📊 Statistics

According to the International Monetary Fund (IMF) in 6 out of the wealthy group of 7 nations, the national debt exceeds or equals the annual economic output. In Italy, their national debt is over 138% of their GDP. These situations need to be changed because if we keep going at this rate the entire world be a part of the global debt crisis.

🔚 Outcome

The outcome of this global debt burden is if we keep going at this rate our world will be in serious trouble, taxes will increase, interest rates, will increase, and we may even experience hyperinflation. Although, if we change our ways and try to contribute to the debt and as a world try to get rid or minimize our debt as much as possible we may be able to avoid a possible depression or crisis.

⛱ Consumer Effect

To put it simply, consumers will be affected by the rising debt because the more debt they have, the more interest payments they need to make, the less money will be spent on government programs. This is a real problem for consumers because a lot of people require incomes on Social Security or Medicaid to live, having some of that funding removed could be really bad for those people and many others. In the past, the debt of the US has caused it to be paying less social security because of that.

🏢Business Effect

This debt affects businesses because early business programs like the SBA (Small Business Administration) are getting less funding as for a lot of other issues where that funding those departments would have gotten instead has to go to interest payments and debt repayment. This can affect businesses a lot especially businesses that rely on funding from these government programs. Nonprofits are also affected because a lot of Non-Profits get grants or other sources of funding from the government.

⏳ Final Summary

In summary, the current debt situation has evolved from being a large country issue to a global concern. The massive amounts of debt in large countries like the US, with approximately $36 trillion in debt, are affecting the entire world. This situation impacts the world because our tax money, instead of being allocated to healthcare, public services, nonprofits, and social security, is being directed toward interest payments. This also means that countries cannot borrow as much money as they used to.

🙏Thank You & Important Information

Anyway, thank you so much for reading this edition of Friday Finance. I hope you really enjoy this article and if you want something featured on Friday Finance just email [email protected] or hit reply on any email and we will work on an article for your liking.

Best,

Jacob Gans

Friday Finance