The world is sitting on a $91 trillion problem. ‘Hard choices' are coming

Governments worldwide are facing an alarming level of debt, totaling $91 trillion, which is almost equivalent to the global economy. This excessive borrowing, partly due to the pandemic, poses a significant threat to living standards, even in affluent countries like the United States. However, politicians, with elections on the horizon, are avoiding addressing this issue honestly with voters, instead making promises that could escalate inflation and potentially trigger a new financial crisis. Investors are growing concerned as debt burdens continue to increase, resulting in higher bond yields and greater borrowing costs for households and businesses. The International Monetary Fund has warned about the urgent need to address chronic fiscal deficits in the US. The mounting debt burden leads to reduced funding for important public services and makes it more challenging for governments to respond to crises. Experts argue that addressing the debt problem will require difficult decisions such as tax increases or cuts to benefits. Despite the severity of the situation, political candidates in the US and the UK are failing to prioritize fiscal discipline. The article emphasizes that delaying debt reduction efforts leaves governments vulnerable to market discipline and potential financial crises. France, for example, experienced concerns about a financial crisis following a snap election, leading to increased bond yields. The article concludes by highlighting the importance of governments’ commitment to managing their debt to avoid unsettling financial markets.