Tett - How will high inflation and rising rates affect the world’s growing mountain of debt?

 During most of the past ten years, this debt question has often been ignored by pundits

Total global debt was 352 per cent of gross domestic product in the first quarter of this year, with private sector debt accounting for two-thirds of this, and public sector debt one-third.

Total global debt today, relative to GDP, is more than double its 2006 level — and triple the 2000 ratio (when it was under 100 per cent).

So what happens now if rates increase? No one knows.

But the really fascinating question is the bigger one: can a thrice-leveraged system ever really deleverage, without suffering a full-blown crisis (that is, mass default)?

Gillian Tett 14 July 2022

https://www.ft.com/content/98a1e4c3-1a4c-4fe1-b55e-56a669a54b81