W3Schools

Outside the Box: World growth caught between debt and a hard place

In the runup to the 2008 global financial crisis, developed nations went on a borrowing spree. Debt was used to drive economic growth, allowing for immediate consumption and investment. Spending that would have taken place over years was accelerated because of the availability of easy money.

The consequences from excessive debt continue to be felt around the world. Yet it’s still fashionable in certain economic circles to downplay the problems of debt and its claims on future income and wealth.

This argument is flawed. It ignores the effects of fractional banking and leverage, which can multiply the process rapidly.

Borrowing is assumed to finance assets or investments that generate income or value in order to repay principal and interest.

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