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The Positive Flipside of Rampant Inflation

December 5, 2024

The biggest debt reduction scheme in history?

by Robin Wigglesworth
FT

OK OK, arguing that inflation can have positive side-effects is a lot harder today than a month ago. But it has led to one of the biggest declines in global indebtedness in history — possibly the biggest?

The Institute for International Finance has released its latest global debt monitor, which shows that the ratio of global debt to GDP fell from a post-Covid peak of 357 per cent in 2021 to 327 per cent at the end of the third quarter of 2024.

This is a 30 percentage point reduction in global debt-to-GDP in just four years. Admittedly that only takes us back to the 2019 level, but highly leveraged beggars can’t be choosers.

The reduction is mostly because nominal GDP has been growing a lot faster — thanks largely to inflation — than governments, companies and people can borrow.

Continue Reading at FT.com…

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