For years now – thanks to record-low interests, quantitative easing and stimulus plans by governments and central banks – the world has been suffocating in debt. From governments to households, it seems every region of the globe is just drowning in debt and IOUs.
This is something that has been much talked about in libertarian economic circles for years, even prior to the economic collapse. However, the mainstream elitists scoffed – politicians, Keynesians and unions – at the suggestion that perhaps we should start limiting our debt levels.
One major Wall Street firm is now suggesting that perhaps we are too clouded in debt.
Andrew Wilson, the European chief executive of Goldman Sachs Asset Management, is reported to have warned that the world is drowning in debt, and the inability to pay it off because of a lack of jobs among today’s youth may be the straw that breaks the camel’s back.
“The demographics in most major economies – including the [United States], in Europe and Japan — are a major issue — and present us with the question of how we are going to pay down the huge debt burden,” Wilson was quoted as saying, according to the London Telegraph. “With life expectancy increasing rapidly, we no longer have the young, working populations required to sustain a debt-driven economic model in the same way as we’ve managed to do in the past.”
Ostensibly, most concur that cash stimulus and economic growth aren’t the primary panaceas to this dire issue. Instead, suggests Wilson, the world has to look at immigration and workforce expansions as methods to help pay down debt levels at both the state and personal level.
Aging populations is something that many economists have been concerned about.
In the United States, for instance, Social Security is already strained, but within the next decade when the last of the Baby Boomers retire, it’ll be hard to fund payments (SEE: David Walker warns of Social Security, state pensions insolvency). Insolvency, in other words. In Canada, the pension plan will only be in positive territory until the year 2022, but then it will pay out more than it takes in.
With the birth rate among millennials at a record low, there won’t be new generations of workers paying down this debt (SEE: 15% dip in birth rates among millennials to pose problem for seniors’ entitlements). Thus, there will likely be an economic and societal shift.
This is why debt and deficits should be bigger issues than they are today. When you have these types of circumstances, the debt problem balloons and becomes the No. 1 problem to a country or a household.
Just how much is the world in debt? It is estimated that we’re in the red by more than $60 trillion, and we accrue more than $4 trillion in interest every seven seconds (courtesy of National Debt Clocks).
Note: this doesn’t take into account unfunded liabilities and expenditures and personal debt levels.
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