The world forever in debt? No, there is a way out
In a globalized world, the crises will increase. In order to be prepared for this, the debts have to be reduced, says WELT editor Frank Stocker
Quelle: Getty Images/Driendl Group, Claudius Pflug
The recent exacerbation of the international debt crisis is clearly due to the corona pandemic. But there will always be crises. That is why the debt must be reduced – carefully but decisively. The money is there.
Dhe global debt has recently risen faster than it has ever been since World War II, by $ 28 trillion. According to the International Monetary Fund (IMF), mankind is now sitting on liabilities totaling 226 trillion dollars – that is more than two and a half times the value of all goods and services that all eight billion people on earth produce in one year.
All of this is a consequence of the pandemic and there is hardly anyone who would deny the necessity of this debt in view of the events of the past two years. The alternative would have been waves of bankruptcies, mass unemployment and the impoverishment of large sections of the population. Or the unprotected rushing through of the pandemic with millions of additional deaths. Neither of these are real alternatives.
However, this is now the second event in twelve years in which the states had to intervene with gigantic support programs on credit. In 2008/09 it was the financial crisis that made this necessary. Back then, too, the alternative was bank failures, depression and mass unemployment. Fortunately, this was also avoided.
Both crises became so fundamental because they took place in a globalized world. Although globalization is likely to advance more slowly in the future, it will not be turned back. It can therefore be assumed that there will be further crises, whenever, in whatever form. And again the states will have to help out with billions and trillions.
It is therefore important that states prepare for this in the years to come. To do this, they must finally lower their debt ratios. This should be done carefully and with caution, under no circumstances should the growth be stifled again with hasty steps. But the goal must be clear.
The investments that are undoubtedly also necessary – keywords climate change, infrastructure, digitization – must therefore be made primarily through private capital. After all, the money is there – for every euro in government debt there is one euro in assets with private investors. This capital must be mobilized, be it through framework laws, start-up financing or tax incentives. For this, the governments must set the course in the coming years, no, months.
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