Why governments are 'addicted' to debt | FT Film

Developed economies around the world are loaded up with debt. That was less of a problem in the era of free money but inflationary pressures are back and structurally-higher interest rates mean debt is more expensive to issue and service. Many investors have been warning that governments are addicted to debt for the past 20 years and the alarm bells are growing louder. This film examines what some are calling the biggest issue in global finance today, the role of the 'bond vigilantes', and whether government borrowing could spiral out of control.

#markets #debt #borrowing #déficit #bonds #trading #investment #finance #investors #japan #us #donaldtrump #elonmusk #doge #uk #liztruss #rachelreeves #germany #friedrichmerz #china #italy #france #yields #bondvigilantes #bondmarket

00:00 Introduction
01:05 Why the world is 'addicted' to debt
03:27 Government bonds explained
04:11 The debt 'death spiral"
06:18 Where does the deficit go?
07:47 Inflationary pressures
09:59 Return of the 'bond vigilantes'
11:03 The UK's Liz Truss moment
12:39 America's unsustainable debt profiles
17:32 Japan's debt and its determined central bank
18:54 China's 'staggering' debt levels
19:50 Italy, France and Germany
22:49 A risk of a financial market 'heart attack'
24:51 Deficits 'can be useful'
27:12 The future

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[lucymarak]

Over the last 15 years, the stock market and broader economy were heavily influenced by over $8 trillion in Federal Reserve Quantitative Easing, but given current conditions, it seems highly unlikely that the Fed will repeat this on the same scale. Unlike in 2008, when QE was first implemented amid mild deflation, today's environment is marked by persistent inflation risks. If the Fed were to restart large scale QE and drive real bond yields deeply negative, it would quickly become the primary buyer of U.S. government debt, a scenario that risks fueling double digit inflation. With a $2 trillion annual deficit and over $7 trillion in U.S. Treasuries maturing each year, the government faces significant refinancing challenges, making uncontrolled money printing unsustainable. In this volatile landscape, strategic investing has never been more critical I’ve grown my portfolio yielding 520K from active trading in just a few months, thanks in part to Elric Jorven deep market expertise and disciplined approach.

[biafranrepublican]

The cinematography is hilarious, like I'm watching a finance-themed Avengers movie

[jackshultz]

While it’s true that the public debt is the private sector surplus, there’s a problem in that the public debt is widely held while private surplus is concentrated in a very few hands. Essentially it’s a transfer of public wealth to private wealth.

[Good.Evening.Mr.Britain]

They’re literally soft launching a Great Depression for us

[bobkent]

As every addict says: "I can get off the drugs any time I want."

[Chocolate_teapot]

As my man Gary Stevenson says “if you have a system where all the money goes to the rich, and you have no way of taxing that back, in the long run, you will bankrupt your government and your entire society”.

[jeanlefranc]

For the most part, debt is the symptom of mankind’s deep wired belief that all problems will somehow disappear in the future.

[echance]

After listening to all the experts in this video, I've concluded that in order for a warning about government debt to be so spine-chilling that it spurs people to act, it MUST be delivered in a Northern Irish accent (the scariest of all accents, except maybe for South African).

Liam Neeson will never get another Oscar nomination, but maybe he can win a Nobel Prize by terrifying western governments into being more responsible.

[PASCALDAB]

We are debt slaves. We are paying debts from borrowing done in our names, without our consent for the most part. But rather than get a bill in the mail, the interest is built into every good and service we buy. We are the embodiment of debt because the cost is paid by the very lifeblood of the consumer, earned over a strictly limited time called a life. We live on a prison planet.

[liberalcynic]

Perhaps it is time governments tax those who benefited from debt being free and driving asset inflation?

[keatkhamjornmeekanon]

I love this video because it's a solemn warning to governments around the world.

[alexsteven.m]

Tariffs will increase costs of finished goods and components used throughout US manufacturing. This will be an immediate and huge hike in inflation. To fight inflation the Fed will have to hike interest rates which will be wonderful for the billionaires but possibly take away the middle class. Inflation is so high that consumers are literally taking debt for basic life necessities. Collapse has indeed begun..

[jeffDwyer]

The U.S. economy relies on ongoing credit and debt generation for sustenance. The Federal Reserve is expected to increase the money supply, leading to further debt accumulation for the average American. So how exactly can we guard against the coming financial reset Like what are really the best strategies to make our portfolio recession proof against the incoming financial reset? I'm very worried about my $310k stock portfolio.

[SadSamba]

As always, FT content is 10 levels higher than any others. Keep it up! Thank you

[omuribep]

This is an excellent video. Lots of things to learn & master about macro global economy. Good job, FT !!

[GustautBokosh]

Us (goverment): hey, we need more money to redistribute. Can we tax you more?
Rich people: no. Take a loan.
Us (goverment): oh.. okay..


* Goverment is us, everybody

[Isabellamartinez]

My main concern is how to survive all of these financial and political crisis, especially in light of the US political power scuffle. The government has really called things more difficult for its citizens, and we can't sit back and bear all the consequences of the bad governance.

[CoretteLécuyer]

It's a bit annoying and unfortunate. When i was born, the national debt was $2, 150 per person. Now it's over $100, 000 per person. And I'm not even that old. It's truly alarming and best advice get out of debt, make regular investments and be debt free and financially stable.

[sluglife]

When it comes to developed nations: Because they refuse to raise taxes on those with wealth to a point which covers necessary state spending. So they borrow money from rich people and their institutions instead of taking it from them. Which means that at the end of the day the rich actually profit from lending money to governments, in the form of interest, which basically gives them a rebate on the taxes they do actually pay, and they end up contributing very little relative to what they make.

[Andyfarmer]

Glad to see Ray Dalio getting airtime - his understanding and experience on this issue is unbias and non-political - and 10x better than almost all of the other people on this video. Strong case that Dalio's combo of business founder, phd-level life learning and real world experience has made him the GOAT of macro economics.