WASHINGTON POST COLUMN: …What we have is a global debt trap. The combination of high debt and low economic growth is inherently unstable. There’s little room to maneuver. If all the countries with high debts simultaneously tried to reduce them through sizable spending cuts and tax increases, the collective effect would be a calamity because worldwide consumer purchasing power would plunge.
On the other hand, slower economic growth makes it harder for countries to service their debts, which are still mounting. From 2007 to 2014, worldwide government debt rose $25 trillion or roughly three-quarters, according to the McKinsey Global Institute.
It’s not clear how much longer these increases can continue, but even a mild effort to stanch them might founder on opposition from retirees and near-retirees.… (more)
