A Bigger Crisis Is On The Horizon, And It Will Last For Decades

As most of the news talks about imposing mandatory lockdowns and handing out money to citizens, there has been a rapidly expanding problem in the background of all this news, and in fact, it is a problem that the world has never seen before. could create a

crisis

that

will

not only be felt next week, next month or even next year, but could be felt for several

decades

during World War II. However, Britain was in the middle of war against the Axis powers. Britain hit a roadblock: they were quickly running out of money, so they began seeking to borrow money from both their own future taxpayers and the United States and Canada in 1941.

Britain began accepting loans and going into debt to finance the war. and by 1945 Britain had taken on almost ten billion dollars of debt from its creditors. At that time, Britain's debt-to-GDP ratio was a whopping 200 percent, meaning the country had twice as much debt as the total market value of all its goods and services. produces for an entire year and one perspective for you is that the World Bank states that once a country reaches a debt-to-GDP ratio above 77 percent, its economy

will

begin to slow down, since such a large portion of its income is will be used to pay your debts. own debt, so after the war ended, Burton had accumulated a debt that was so large that they could not pay it off in a year, five years, ten years or even 20 years.

On December 29, 2006, Britain made its final payment for its World War. two debts owed to the United States and Canada, this means that British taxpayers from 1945 to 2006 had a small portion of their tax bill each year going towards the debt the country accumulated in the 1940s and for about a decade after the Second World War. The economy was drastically hampered in part due to the outstanding debt they incurred, however, their economy eventually recovered thanks to an influx of taxpayers called baby boomers, as well as some economic reforms and structural investments, but you'll see that Britney He was a little lucky.

Most of the time, when a country accumulates as much debt as Britain did during World War II, it is not so lucky. In 2001, Argentina's debt-to-GDP ratio peaked at one hundred and sixty-six percent, causing the country to default on more than $100 billion. dollars of debt, this default caused capital to leave the country and soon the nation saw millions of people fall into poverty while unemployment peaked at 19 percent and to this day Argentina still has not fully recovered. of the debt

crisis

it went through. Almost 20 years ago, similar stories could be heard around the world: Greece in 2012, Zimbabwe in 2006, Venezuela in 2017 and Russia in 1998, what I am trying to point out here is that, although debt can be a good thing to take on, To To solve today's serious problems, there will almost always be serious long-term consequences that could

last

for years or even

decades

, so now let's bring this back to the United States, whether you know it or not.

The United States essentially goes into debt. Historically, the US economy has been so large and grown so fast that taking out tens of billions of dollars here or there has not been a big deal because it was such a small percentage of the country's overall economy; For example, in 2006, the United States had a relatively healthy debt-to-GDP ratio of around 60 percent, but then the financial crisis hit and during the financial crisis the United States began looking for ways to inject money into the economy, so which began receiving hundreds of billions of dollars, which would eventually equal trillions of dollars. of debt and some people might think that the United States, along with all the other countries that went into debt to overcome the financial crisis, have paid off some of the debt they accumulated in 2008 and 2009, but in reality it is quite the opposite, as seen Since the financial crisis many developed countries around the world have been accumulating more and more debt each year, while economic growth has slowed, this means that many countries may find it more difficult to pay their debt today than during the financial crisis and this is what I mean, the United States' debt-to-GDP ratio before lockdowns and this pandemic was about one hundred and six percent, Canada's was about eighty-eight percent, Italy's was 133 percent, Singapore's 109 percent, and Japan's at an astonishing level. 237 percent what I'm trying to say here is that before this crisis hit, governments around the world were more in debt than ever and then of course the lockdowns hit and everything started to accelerate.

These checks that citizens receive today are paid and do not come from the government's bank account because most governments do not have much money right now and have little to no tax revenue for the foreseeable future. This is all coming from debt, so yes, all the aid packages and stimulus packages that every country in the world is giving out is essentially a form of debt that their taxpaying citizens will have to pay off for decades to come, in fact if you live in the United States right now. About one in every ten tax dollars sent to the federal government goes directly to paying interest on the national debt and not to any government program, and after this crisis passes that number will only increase, posing a terrifying scenario for many.

Countries like the United States will accumulate so much debt over these few months that they will not be able to pay for some of their government-funded programs in the future, so things like Social Security, which is already running out of funds, education, military healthcare, one or all. Some of those things could be major cuts in the future to be able to pay for the current stimulus packages, and if a government wants to keep all of these social programs at their current level without accumulating more debt in the near future, it will have to do something. That's not popular with your citizens, which is raising taxes now.

I would just like to mention that it is very unlikely that developed countries like the United States, Canada or the United Kingdom will default on their loans, which would send the countries into an even deeper depression. but it is true that the debt that is accumulating today will end up slowing future economic growth, increasing future taxes and reducing future financing of social programs and this effect could radiate in the coming decades, meaning that children born today in 2020 They'll probably pay for a decent portion of the stimulus packages when they become adults, and government debt isn't the only debt problem we have in the world right now.

Before the crisis began, households were already accumulating record levels of debt in 2020, households in the United States had approximately $14 trillion worth of debt, which is the highest debt level in history and the The biggest increase in household debt from 2008 to 2020 was, of course, due to student loans. In 2008, student loans accounted for approximately $611 billion in household debt. Meanwhile, today household debt is approximately $1.6 trillion and when you add all this up you will see that the average household has approximately $100,000 of debt, while these same households have on average only $8,000. of savings and for people under 30 years old it is even worse, since they have on average only two thousand seven hundred dollars in savings, which is enough to cover a month of housing, food and insurance for an average person, so What all this means is that going into this crisis, the average person was already living paycheck to paycheck with little to no savings and tons of debt and this was especially true for younger people.

It also means that the $1,200 stimulus checks might help some Americans survive another week or two, but it won't be good enough for a long-term solution, the only way to help people avoid default. rent payments, defaulting on their loans or defaulting on their mortgages is to lift lockdowns around the world, but that might not happen for a while and I can't help but think that as more and more households become unemployed, the Both individual and national debt will start to pile up to stay afloat and this will happen at record levels that we have never seen before and with that being said, we have already moved on from the 2008 financial crisis in terms of employment levels and it looks like we could be heading into an economic downturn we haven't seen since the Great Depression, and depending on what other policies are enacted in the near future, we as taxpayers will probably pay for itself in a two-three-month period over the next few decades, but this problem could be much worse in the short term for developing countries;

In fact, the IMF and the World Bank have called for an immediate suspension of debt payments for developing countries. The developing countries of the world, as many are very close to defaulting on their debts, this could create an unprecedented debt crisis in the near future that would likely radiate across the world now. I would just like to mention that central banks are playing an important role in this debt. crisis right now and they are printing money at all costs, which is causing a lot of things like inflation and currency devaluation, but it could also help pay off debt in the future through something called quantitative easing, but that could be a complete video in itself.

So who knows, this could be the worst debt crisis the world has ever seen, but maybe not only time will tell what you think about the debt crisis. Let me know in the comments below. Also click the like button because algorithms help me. a lot, you can also hit the subscribe button if you want to see more of my videos and please check out my documentary playlist for more videos like this so make sure you click on that playlist and I'll check them out in a few seconds you