💵THE WORLD IN DEBT💵
☑️The fact that the whole world is in massive Debt that can not be repaid is a buzzphrase that was around for like 20 years already.
20 years passed and nothing bad has happened, so what to worry about? In fact an entire political and economic movement called MMT or a modern monetary theory emerged claiming that government debt does not matter and that we can, you guessed it, print as much as we need(kinda)
☑️But the size of the debt itself was never really and issue so long as the government or a big company could service the debts.
That is if their cashflow was positive enough to cover the interest payments on the debt. Now however, as the FED is raising rates, this is an issue.
☑️And its not the USA who’s pile of debt we need to be worried about(they are borrowing in the currency they can print themselves, remember?) but rather the rest of the world and the companies. The majority of developing countries don’t have the internal capital required for development, so they need to borrow on the international financial markets in Dollars. And these counties are now facing a perfect storm of a higher cost of new borrowings in Dollars, lower revenues from foreign trade due to recession(and yes we are in a recession, Wake up) and the massive energy and food costs due to the war in Ukraine and the problems caused by the supply chain crisis.
☑️Most big public companies aren’t doing great either. The share of listed companies with the debt servicing costs higher than the profits is now more than 25% and if we exclude the accounting and financial engineering shenanigans, it is save to say that this share is close to 30%.
☑️So the third of the economy is outright insolvent. Multiple countries will either default soon or will at least be plunge into civil and economic unrest and go the way of Sri-Lanka, Pakistan and others… And Jerome Powell said that he aint stopping and that the Fed funds rate should go up by at least 2 percentage points more. So instead of the collapse of the USA, we are likely to see a chain reaction debt crisis In the rest of the world unless the FED changes its mind…
I Hope you guys learned something new today✅
Wish you all Best Of Luck👍
😇And may the odds be always in your favor😇
Dear followers, let me know, what topic interests you for new educational posts?
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