The Piper is Calling: A Sea of Debt, a World of Problems

Nathan McDonald
4 min readOct 21, 2020

The world remains steadfast, tightly gripped in the midst of the COVID-19 pandemic, however, there is another calamity that is lying in wait and is sadly unavoidable at this point.

The debt bomb is primed, set and ready to go off, not just in the United States, Canada, or the United Kingdom, but rather across the entirety of the world.

There is no escaping it, but there is still time to prepare.

Economic Disaster After Economic Disaster Has Taken Its Toll

The dot com boom and bust, the housing collapse of 2008 and now the economic ruin caused by the COVID-19 lockdowns have all systematically chipped away and destroyed the foundation of many economies across the world.

Led by Keynesian economists, Central Banks around the globe have avoided taking their medicine and letting the system collapse and correct itself naturally.

This has been done through their favorite tool of economic control, printing copious amounts of fiat money and throwing it at the problem.

The results of their actions are in the pudding as the world continues to chug along.

They have done what many believed to be impossible time and time again, putting band aids on the wounds and keeping the system afloat, for just a little bit longer each and every time.

Chart source,

But at what cost?

There is a reason why the price of gold has continued to trend higher and higher since these unchecked bailouts began in earnest, accounting for the new level of fiat money injected into the global economy.

The problem with simply throwing artificial, printed out of thin air money at each and every economic calamity is the fact that you are just burying the problem and masking the gaping wound.

The rot still exists and the structural, long term damage to the system still remains. You cannot dig yourself of a “debt hole”, by simply creating an ever increasing amount of debt.

Nothing has changed, nothing has been fixed and the debt continues to grow and grow, reaching what is unarguably now, unsustainable levels.

Are the COVID-19 Bailouts the Icing on the Cake?

The latest bailouts that occurred in every established country around the world, in response to the COVID-19 pandemic, is truly the icing on the cake.

In a record breaking period of time, countries have printed ungodly amounts of fiat money, tossing it at their citizens, businesses and whoever else would accept it, as people were forced out of work and made to stay home.

This brought the global economy to a halt and although some new versions of “normality” are now returning in many areas of the world (others remain less well off), businesses on main street are still heavily impacted and feeling the pain due.

However, the worst part of all of this, at least economically speaking, is the long term damage that has now been done and ramifications that are now coming due to these bailouts.

Chart source,

In true Keynesian fashion, countries increased debt levels the likes of which have rarely been seen before outside of war times.

Japan, Canada, Australia and the United States led the charge, injecting a stunning 21.1%, 16.4%, 14% and 13.2% respectively of stimulus, when compared to their yearly GDP, directly into their economies.

The worst part of all of this, is the fact that more stimulus is going to be needed before the COVID-19 pandemic is fully resolved, with many countries already working on fresh waves of bailout money, meaning that further significant increases in debt to GDP ratios are yet to come.

In Conclusion

The world is now truly awash in debt, with many countries finding their debt to GDP ratios at unsustainable, non recoverable levels.

Chart source,

Debt to GDP ratios at this level are akin to “circling the drain”, with the problem now compounding upon itself as making the interest payments on this debt is the best most countries can hope for.

This will only further exacerbate the problem, causing these highly indebted countries to go further and further into debt, to help finance the pre-existing debt and new obligations / bailouts that arise.

We are truly living in a sea of debt and a world of problems.

The debt bomb is primed and ready to go off, only needed a spark to ignite it.

Don’t be caught off guard when that day inevitably occurs and this “house of cards” comes crashing down upon our heads.

Get prepared and keep stacking.

- Source, Nathan McDonald via the Sprott Money Blog



Nathan McDonald

Financial journalist with over 10 years of experience. Writing about geopolitics, economics and all things related to precious metals.