What are the factors contributing to the global debt crisis observed since 2008?

The global debt crisis that emerged after 2008 is rooted in several significant economic factors. Initially, it can be traced back to the financial systems' responses to the economic collapse, resulting in increased government borrowing and reduced borrowing accessibility for individuals.

As nations reached the tipping point of 100% GDP in debt, the burden of servicing this debt grew. For instance, if an economy is growing at 2% annually but is also facing a 2% interest rate, nearly all growth is funneled into interest payments. This scenario creates a precarious balance, as sustaining economic growth becomes challenging.

• After 2008, corporations and households took on substantial debt, resulting in over-leveraged financial systems.
• Governments responded by slashing interest rates to stimulate the economy and allow for easier debt servicing, exacerbating growth in public debt.
• The global average of 400% debt to GDP signals increasing fragility within national economies, which continues to escalate.

These dynamics have generated a feedback loop where increasing debt levels necessitate more borrowing, leading to unsustainable fiscal practices.