Government Debt
What is fiscal space?
This term describes how much room a government has to borrow or respond to emergencies.
What is inflation?
the rate at which the general level of prices for goods and services is rising, which in turn decreases the purchasing power of currency
what are banks?
Banks are financial institutions that accept deposits, provide loans, and offer other services to individuals and businesses. They make money by charging interest on loans and collecting fees for services, and they play a crucial role in the economy by keeping money safe and facilitating transactions.
What is political gridlock?
Political conflict in Congress and elsewhere creates this problem for economic policymaking.
What is a soft landing?
Many leaders still hope for this type of landing, where the economy cools without crashing.
What is an aging population?
One major demographic trend increasing government spending and debt.
What is the yield curve?
When short-term interest rates become higher than long-term rates, this curve is said to be “inverted.”
What is shadow banking?
Hedge funds and private equity are part of this loosely regulated financial sector.
What are catastrophic risks?
Policymakers often underestimate these rare but high-impact events.
What are sovereign debt defaults?
One possible starting point for the next global crisis, involving governments unable to pay their debts.
What are interest rates?
When debt becomes too high, even small increases can cause these to spike.
What is economic growth?
High interest rates reduce inflation but slow this at the same time.
What is a chain reaction across global markets?
When asset prices fall quickly, risk in the shadow banking sector can create this chain effect.
What is interconnected?
The global financial system today is more this than ever, making crises spread faster.
What is a liquidity freeze?
Another potential trigger involving sudden credit shortages.
What are interest payments?
These payments are becoming one of the fastest-growing parts of government budgets.
What is economic scarring?
Economists call long-lasting damage from tight credit conditions this.
What is the IMF?
This global organization warned about increased risk in non-bank financial sectors in 2024.
What is productivity growth?
Gopinath warns that this key measure—how efficiently economies produce goods—is slowing.
What are private credit markets?
A collapse in this private sector could also spark a crisis.
What is the cycle of rising borrowing costs and rising debt?
The Federal Reserve Bank of Dallas warned that high debt levels can cause governments to enter this dangerous cycle.
What are pre-recession warning signs?
Tight credit markets and slowing investment are examples of this type of economic signal.
What is the non-bank/shadow banking sector?
Experts warn that this sector could unravel first during a financial downturn.
What is population aging?
This long-term demographic trend weakens government budgets and increases fiscal risk.
What are past global financial crises?
According to your presentation, today’s warning signs closely resemble patterns seen before these major events.