At what point is the debt going to matter, albeit personal debt or government debt. And although some think that centrals banks cannot go bankrupted since they owe the printing press, individuals might not have that option.
It is no secret that the national debt across the world has been running almost out of hand. Japan’s debt of example is 237% of its GDP.1 Household debt has also been rising with Switzerland taking number one, their household debt is 129% of GDP.2
Governments can pay debt by, reducing spending, increasing taxes and printing money. The first two options are the most responsible but they will most likely lead to political unrest and possible destabilization of the government. The latter has a temporary favorable impact but has catastrophic ending. Most governments around the world have chosen the latter.
With the world interdependence and extreme leverage of money, the impact of any perturbation in the global financial system can be severe and far reaching no matter where it starts. So, allocating one’s wealth must take into consideration this dynamic. People in general also have to find a way to fight the control of central banks and maintain their buying power and enjoyment of life.
The allocation of wealth must take into consideration geographical, currency, debt, economic growth, etc. It is no longer enough to talk about stocks and bonds. It is no longer enough to talk about being debt free. In fact it might be the exactly the opposite that sets your free.
Refs:
(1) – Households Debt to GDP
(2) – Debt to GDP Ratio by Country 2020
(3) – Interest on the National Debt and How It Affects You