Predictions on the future are usually rosy and about getting more. For instance, the future of technology is about solving more problems – things getting easier. Sadly, the future of debt doesn’t look so good. Furthermore, debt levels seem to be rising nonstop since time immemorial proving that the drastic measures taken by governments and central banks globally to reduce debt are ineffective.
Although technology has and is still expected to solve many problems, it hasn’t been able to get rid of financial problems. In fact, technology is expected to worsen debt levels as it becomes easier to buy things. Futurists believe we will be able to secure loans instantly with credit cards among other financing avenues the same way we can open a device like a Smartphone by simply looking at it.
Personal debt now amounts to trillions globally. As the debt levels continue to rise, futurists predict a future where debt/loans will become normalized. People will stop being embarrassed about having debt or even being broke. In fact, those people who pay their bills on time may start being considered naive. In a society where everyone has debt, very few will care about accumulating debt. The simplicity associated with accessing debt will worsen personal debt.
The focus will be on a person’s golden years- retiring in debt. Governments are expected to be under immense pressure to support old voters in their golden years, especially those belonging to the most significant voting blocs. The government support is expected to include food and shelter surpassing what is regarded as normal government retirement support like healthcare. When personal debt becomes so widespread, politicians and governments will have to comply triggering a vicious taxation loop.
Impact on the younger generation
Increased personal debt levels are expected to result in higher taxation going towards seniors in society. This will, in turn, demotivate the younger generation from repaying their own debt. The term “rich” may be redefined to mean “not broke”. In fact, most futurists view a global default as the perfect “doomsday scenario”. The world may plunge into serious problems simply because people crave things they can’t afford to buy, and credit is readily available.
Government debt: America, China, and India
There is a shocking trend surrounding governments which boast of having the strongest fastest growing economies. Such governments which include; America, China, and India are borrowing so intensely creating a scenario that is contradictory.
Simple economics dictate that governments should spend less. In fact, governments shouldn’t borrow at all if the economy is strong. The America, China and India governments seem to be oblivious of this simple fact and the future consequences given these three countries boast of having the largest economies. Therefore, government debt levels in these countries are bound to affect the entire world.
A country like India is expected to be the largest in the world by 2040 in terms of population and labour force. If the current debt levels of India continue growing, their chances of being a global challenger are very slim. India’s government borrowing in 2018 (as a % of GDP) already indicates a rising deficit; however, this is played down as a mere revenue shortfall. India isn’t the only country using politicians and accounting tricks to cover up ugly budgets. What’s more – Indian states borrow more aggressively than the national government. Countries growing rapidly and comprised of a young workforce shouldn’t be doing this.
China isn’t any better. Although many view China as the current global economic leader in terms of market and labour force, the GDP has declined by 50% over the past decade. However, China claims this is a natural occurrence as the GDP size expands. The BIS (Bank of International Settlements) is of a contrary opinion as it indicates a bad record on every measure from corporate to government and consumer debt. According to the BIS, most Chinese debt is corporate debt, yet government-owned enterprises take most of this debt. This is contrary to what the Chinese government has been trying to convince the world.
America isn’t any better either. We’ve already seen a debt crisis originating from the U.S. before. Although the US economy claims to have added approximately $7 trillion in wealth over the past year, national debt levels are still rising. No country has ever prospered from borrowing heavily when the times are good, yet this is what the global economic leaders are doing and “dressing it up”. There is a slim chance that technology will liberate us from the debt problem in the future. So, we can only watch and wait for the big economies to drag everyone down.