global vaccine shot in the arm

How do you even begin to visualize $277 trillion?

If we convert it into seconds, 277 trillion is the equivalent of 8.8 million years. I’m not sure what was happening that long ago, but I guarantee you it didn’t involve people.

It’s been estimated that Jeff Bezos increases his net worth by about $321 million a day. At that rate, you’d have to work for close to 863,000 days, or 2,364 years, to reach $277 trillion.

You get the point. It’s an unfathomable sum.

It’s also the total amount of debt the world is expected to hit by year-end. That’s according to the Institute of International Finance (IIF), whose members include some 400 banks and financial firms around the globe.

This year alone, as of the end of September, the world added $15 trillion to the debt pile, with government borrowing accounting for half of the increase, the IIF says. Debt in developed markets is set to hit 432% of gross domestic product (GDP). For emerging markets, it’s closer to 250%.

By 2030, the IIF estimates, we could be looking at $360 trillion in total debt.

China leads the world in middle class spending
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So how did we get here, and what can investors do to protect their own wealth?

As you may expect, the economic fallout from the pandemic has dealt a huge blow to government coffers. So far in 2020, the U.S. has added more than $4.8 trillion to the federal debt, the most ever for a single year.

This has brought total federal debt up to a record $27 trillion, or 143% of U.S. GDP. Debt per U.S. taxpayer now comes in at a staggering $218,450.

U.S. federal debt has increased the most in 2020 than in any past year
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We can’t blame everything on the pandemic. According to the IIF, the past four years have seen the largest debt buildup on record, with $52 trillion accumulated since 2016.

What this means is that, even during the pre-pandemic economic boom years, governments were not practicing sound fiscal management. Granted, governments weren’t the only contributors to the debt buildup, but they represent a huge part of it.

Knowing this, there’s no way we can reasonably expect them to get us out of this mess.

“There is significant uncertainty about how the global economy can deleverage in the future without significant adverse implications for economic activity,” IIF economists say.