The world in debt💵

:ballot_box_with_check:The fact that the entire world is in massive debt that cannot be repaid is a buzzword that has been around for about 20 years.
What is there to be concerned about after 20 years of nothing bad happening? Indeed, an entire political and economic movement known as MMT, or modern monetary theory, has emerged, claiming that government debt is irrelevant and that we can, you guessed it, print as much as we need (kinda)

:ballot_box_with_check:However, the size of the debt was never an issue as long as the government or a large company could service the debts.
That is, if their cashflow was sufficient to cover the debt’s interest payments. This is an issue now, as the FED raises interest rates.

:ballot_box_with_check:And it is not the United States’ debt that we should be concerned about (remember, they are borrowing in currency that they can print themselves), but rather the rest of the world and the companies. Because the majority of developing countries lack the internal capital required for development, they must borrow in US dollars on international financial markets. And these countries are now facing a perfect storm of higher interest rates on new dollar borrowings, lower foreign trade revenues due to the recession (yes, we are in a recession, wake up), and massive energy and food costs due to the war in Ukraine and the problems caused by the supply chain crisis.

:ballot_box_with_check:Most large public companies are also struggling. The share of listed companies with debt servicing costs greater than profits is now more than 25%, and if accounting and financial engineering shenanigans are excluded, this share is close to 30%.

:ballot_box_with_check:As a result, one-third of the economy is bankrupt. Multiple countries will either default soon or be thrown into civil and economic unrest, following in the footsteps of Sri Lanka, Pakistan, and others… And Jerome Powell has stated that he will not stop raising the Fed funds rate by at least 2 percentage points. So, instead of the US collapsing, the rest of the world is likely to experience a chain reaction debt crisis unless the FED changes its mind…

I hope you all learned something today.

Best of luck to everyone!

And may the odds always be on your side.

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