The Alarming Rise in Global Debt!
Patrick Boyle On Finance
Patrick Boyle
4.9 • 308 Ratings
🗓️ 26 May 2025
⏱️ 28 minutes
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Summary
Developed economies around the world have been growing their debts over the last twenty-five years. This was less of a problem when interest rates were close to zero but in the era of trade wars, lower credit ratings and higher interest rates, debt is more expensive to issue and service. Bond investors have worried that governments are addicted to debt for quite some time, and recent drama in the Japanese bond market along with the deficit spending of Trump's "one big beautiful bill" lead many to question the ability of governments to cover massive budget deficits. This video looks at the drivers of growing government debt, what the money is spent on, can Elon Musk's DOGE cut spending and analyze the role of the 'bond vigilantes', to understand if huge budget deficits and government borrowing could spiral out of control. Patrick's Books:Statistics For The Trading Floor: https://amzn.to/3eerLA0Derivatives For The Trading Floor: https://amzn.to/3cjsyPFCorporate Finance: https://amzn.to/3fn3rvC Ways To Support The ChannelPatreon: https://www.patreon.com/PatrickBoyleOnFinanceBuy Me a Coffee: https://www.buymeacoffee.com/patrickboyleVisit our website: https://www.onfinance.orgFollow Patrick on Twitter Here: https://bsky.app/profile/pboyle.bsky.socialBusiness Inquiries ➡️ sponsors@onfinance.org
Transcript
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| 0:30.3 | Global government debt levels have been growing rapidly over the last 25 years and are now |
| 0:35.9 | expected to exceed $100 trillion by the end of this year. |
| 0:40.2 | For developed countries, the average ratio of public debt to GDP is back to where it was in |
| 0:46.7 | 1945, when public debt rose above 100% of GDP after two World Wars and the Great Depression. |
| 0:55.5 | The recent surge in borrowing was driven by a series of shocks. |
| 0:59.9 | First, the global financial crisis, then the pandemic and then the Russian invasion of Ukraine. |
| 1:06.8 | For most of that period, interest rates were low and falling, but since the pandemic, we've |
| 1:12.3 | seen a spike in inflation globally, which pushed interest rates up, meaning that any new |
| 1:18.1 | debt being issued is much more expensive, but that has in no way stopped governments from |
| 1:24.1 | borrowing and spending. A quick glance at the news shows that even as rates are rising, budget deficits around |
| 1:31.8 | the world are projected to grow. |
| 1:34.3 | Government spending in most countries has been high since the pandemic for a few reasons. |
| 1:40.3 | For one thing, politicians tend to spend a lot more in election years, and 2024 was the |
| 1:46.5 | biggest election year in world history, where 72 countries that encompass half of the |
| 1:52.2 | world's population held elections. |
| 1:55.9 | Governments spent a lot to win re-election, and newly elected leaders are now spending a lot to fulfil their campaign |
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