IMF warns: Global debt reaches levels seen during World War II

The global public debt is now approaching 100% of the world's GDP, a level we haven't seen since World War II.
The IMF warns: debt is high and borrowing costs are rising, thus governments must soon make difficult economic choices.
IMF's debt warning in numbers
The IMF's chart tells a dramatic story. Global public debt as a share of GDP has increased sharply during historical crises: World War I, the Great Depression, World War II, the financial crisis of 2008, and COVID-19.
But today's developments are different. After World War II, debts decreased rapidly, but now forecasts instead show that the debt continues to rise. The IMF expects that global public debt will soon exceed levels from World War II.
Dabla-Norris and Rodrigo Valdes write in F&D magazine that "trust is now crucial for uniting competing goals." This means that governments have difficult choices between spending, taxes, and debt interest.
Did you know? After World War II, global debt fell from 150% to below 50% of GDP in two decades. Now forecasts show the opposite trend.
Why the IMF's warning is important for crypto
The IMF's debt warning has direct implications for the crypto market:
Inflation protection: Governments with unsustainable debt often create inflation to reduce the debt burden. Bitcoin's fixed supply makes it an attractive hedge against currency depreciation.
Trust in USD: The growing U.S. debt puts long-term pressure on trust in USD. Stablecoins and Bitcoin may therefore become more attractive alternatives.
Economic instability: The IMF warns that difficult economic choices are now necessary. Troubling times around tightening have historically led capital to seek independent assets.
Historical background
The chart shows debt peaks at each major crisis during the 20th century. However, after each peak, the debt decreased. Now, the development breaks that pattern.
COVID-19 pushed debt above 100% of GDP. Forecasts show that debt continues to increase instead of decrease. For the first time since World War II, we see no clear path back to sustainable levels.
For crypto, this strengthens the argument for decentralized alternatives to state currencies. As trust in public finances diminishes, trustless systems become more attractive.