Governments worldwide gorge on record debt, testing new limits

The pandemic has pushed global government debt to the highest level since World War II, surpassing the world’s annual economic output. Governments, especially in rich countries, are borrowing still more, partly to erase the damage of Covid-19.

Advocates say the spending, also encouraged by new economic thinking about debt, could usher in a period of robust global growth, reversing the malaise many wealthy countries have felt this century. But if those theories are off-base, the world could be saddled with debts that can be absorbed only via inflation, high taxes or even default.

Either way, the combination of huge debt and markets’ lack of concern is unprecedented. The U.S. government is on course for a budget deficit of $3 trillion for the second year in a row. Despite that and fears of inflation, 10-year Treasury bonds are yielding only around 1.33%, partly because of the Federal Reserve’s caution about raising its interest rates. …

World-wide government debt increased to 105% of global gross domestic product in 2020 from 88% before the pandemic, according to the Institute of International Finance, an association of global financial firms. Total government debt could rise by an additional $10 trillion this year to reach $92 trillion, with most of the increase happening in developed economies, the IIF says.

It is a stark contrast to the aftermath of the global financial crisis, when many countries soon switched from stimulus to deficit-cutting.

Greece’s traumatic crisis, which nearly forced the country out of the eurozone, seemed to highlight the risks of debt. Now, even Greece is finding that it is possible to ratchet up debt, thanks to low borrowing costs that the European Central Bank helps to keep in check.

The United States is exploding its debt in a way never seen in its history. The nation has amassed large debts before, in times of war or recession. But generally it has paid much of its debt back after the nation has recovered.

Right now, the nation is recovering, according to most economic indicators. During recoveries under the Coolidge, Truman and Eisenhower administrations, America paid down much of its debt. But during the “recovery” of the early 21st century, the nation has continued borrowing on a massive scale.

America has reached a new level of debt addiction. …

We are a nation focused on instant gratification, selfishness and greed. This explains why the wealthiest nation in history is still borrowing astronomical amounts of money. If you want something you can’t afford, you charge it on your credit card.If you want government benefits the nation can’t afford, you vote for the politician who promises to borrow money to give you what you want. President Washington was deeply concerned about imposing a financial burden on the next generation. But who even considers what kind of burden we are placing on our future generations?

Living according to the spiritual principle of giving produces prosperity. Borrowing is about getting for self, regardless of the consequences. God says in Acts 20:35 that it is more blessed to give than receive. If you are giving, God says you will be blessed. If you are living within your means, saving, managing and preparing for the future and thinking about your children, then you will be blessed!

Psalm 37:21 says, “The wicked borrows, and cannot pay back, but the righteous is generous and gives” (Revised Standard Version).

As a nation, we have dug ourselves into a pit from which we will not escape, purely because of selfishness and greed.

Herbert W. Armstrong explained in a May 1983 Plain Truth article, “Prepare to Greatly Reduce Your Standard of Living,” that God “is about to punish our nations, in order finally to bring us to Him!” He warned that Britain had already lost its empire and that the United States was also about to lose its prominence.

“[A]lready the noose is around our necks, and is almost daily tightening!” he wrote. “Economic ills are starting greatly to reduce our standard of living!”

He was far ahead of his time, forecasting about a financial collapse that is now about to happen! People may have dismissed this back in the 1980s, but it is clear that those blessings are quickly being withdrawn today, just as he warned.

“The King of Debt,” April 2018, Philadelphia Trumpet