Global issues: life after debt

The great irony of the Great Financial Crisis is that a crisis borne out of indebtedness has spawned even more leverage in its wake. In fact, debt has never before increased this rapidly in peacetime. However, contrary to popular belief, it has not yet created a serious drag on global growth. But this can’t continue forever. Why? Debt, we argue, is a symptom of structural and cyclical forces that raised the ability and willingness to lend and borrow. As these dynamics change course gradually, the drag from debt should rise materially over the next 3-5 years.