Governments are completely addicted: IIM graduates warn that your savings may lead to the next crisis

It does not owe $ 324 trillion of global debt – more than three times the size of the global economy – to countries or oil giants only. Mostly, owe ordinary people.

Lokesh Ahuja, an iIM graduate, sparked a discussion about LinkedIn by highlighting an amazing fact: Global debts are largely held by the citizens themselves, through pension funds, insurance companies, banks and joint investment funds. This means that daily savers indirectly funds the world’s governments.

In the United States, where the national debt rose to $ 36 trillion, nearly 70 % of it is locally held. Foreign pregnant women – led by Japan and China – owns the rest. But Japan’s position is especially ridiculous.

“Japan has the most debt of the United States,” I noticed Ahuja, “however, it also has the highest government debt in the developed world – more than 2.5 times its economy.”

All of this is part of the self -written debt cycle. Governments borrowed to spend on salaries, infrastructure and subsidies. Citizens earn, provide and invest in government bonds. This, in turn, allows more borrowing. The episode continues.

So no.

“When confidence is broken, lenders stop lending,” Ahua warned. And that is when countries cannot re -financing old debts, which leads to crises such as those in Greece and Sri Lanka and Pakistan.

The repercussions are especially severe for developing countries. They are borrowing high interest rates, often in foreign currencies. With the fluctuation of exchange rates, its debts become more expensive – and the most difficult to pay.

Ahuga concluded that “we often talk about people who stumble in credit card debts.” “But the truth is – the ruling is completely addicted.”