'Conspiracy of silence'—Why $91 trillion of global debt remains unaddressed

As the U.S. election, wars, and inflation take center stage, a $91 trillion elephant lurks in the room—and almost no politicians are talking about it.

That astronomical figure is the combined debt of governments worldwide, a looming crisis that threatens global financial stability. Yet, this fiscal time bomb remains conspicuously absent from political discourse.

"Many politicians are not willing to talk about the hard choices that are going to need to be made. These are very serious decisions… and they could be very consequential for people's lives," said Karen Dynan, former chief economist at the US Treasury.

Politicians may be avoiding the subject because tax hikes and cuts to social programs aren't exactly popular on the campaign trail.

As policymakers keep kicking the can down the road, the cost of debt is growing. The U.S. alone will spend $892 billion on interest this fiscal year due to higher interest rates—more than its defense budget.

The IMF shared its concerns about the U.S. debt in their annual review, calling "chronic fiscal deficits" an issue that mut be "urgently addressed."

Harvard economist Kenneth Rogoff called flagrant government spending in recent years "wrong-headed." "In the 2010s, policymakers started thinking debt was a free lunch," he told CNN.

We all know there's no such thing as a free lunch, but do political leaders?

A ‘conspiracy of silence’

A troubling "conspiracy of silence," as the UK’s Institute for Fiscal Studies calls it, has taken hold among political leaders worldwide.

From the United States to France and even fiscally conservative Germany, politicians are sidestepping the looming debt crisis in favor of more palatable campaign issues.

Yet, as debt piles up, financial markets are growing increasingly anxious.

Investors are demanding higher yields to buy government bonds, signaling rising concerns about long-term fiscal health. In France, political turmoil has driven up bond yields by 35%.

This matters for everyone because when governments pay more to borrow, it pushes up interest rates on everything from mortgages to business loans.

Higher borrowing costs can slow down the economy and make the debt problem even worse—the very issue politicians are trying to avoid in the first place.

The perils of debt management

Tackling debt is like handling a ticking time bomb—it's risky, but ignoring it will cause an even bigger explosion when time runs out.

For example, Germany's government is in hot water just for talking about debt limits. In Kenya, proposed tax hikes to address debt led to deadly protests.

However, dodging the debt issue can backfire.

In 2022, the UK learned this the hard way: when then-PM Liz Truss proposed borrowing-funded tax cuts, the pound crashed, and interest rates spiked, quickly ending her tenure.

As debt piles up, the danger grows. The U.S. is on track to owe 122% of its entire economic output in just ten years, according to the Congressional Budget Office.

While there's no universal tipping point, most economists agree that when debt surpasses 150-180% of GDP, the consequences become severe.

Former Treasury economist Dynan warns that crossing this threshold could "seriously hurt the economy and society."