Global debt has reached an astonishing $100 trillion—a staggering figure that’s on track to climb even higher. The Organisation for Economic Co-operation and Development (OECD), a body that includes 38 nations, has been warning for years about the escalating costs of borrowing, and now it’s clear that the situation is worse than ever. Governments and corporations alike are paying the highest interest rates in over 20 years, with many countries dedicating a larger chunk of their GDP to servicing debt than they do on national defense. It’s not just a financial issue, it’s a growing crisis.
This shift in priorities is telling. Today, governments spend 3.3% of their GDP on interest payments—more than on defense spending, which should be a red flag for anyone who believes in the importance of national security. The reality is that this debt crisis isn’t going anywhere soon. In fact, by 2027, nearly half of all government debt will need to be refinanced, and for many countries, particularly low-income nations, this represents a looming disaster. Over half of the debt in these countries will mature in just three years. In simple terms, if they don’t act fast, they’re looking at higher borrowing costs and a potential spiral into default.
The interest rates aren’t helping either. While central banks have made attempts to ease the burden with interest rate cuts, the cost of borrowing remains high. Dollar-denominated borrowing costs have surged from 4% in 2020 to over 6% in 2024, a dramatic jump that adds significant weight to already overloaded national balance sheets. For countries without deep financial reserves or strong credit ratings, this could be catastrophic. It’s a brutal reality that governments now face. The OECD has been urging borrowers to invest more wisely, focusing on productive projects rather than using debt for things like financial engineering or funding shareholder payouts. There’s no room for frivolous spending when you’re staring down the barrel of massive financial strain.
The most pressing issue in all this? Infrastructure. Governments everywhere are pouring more money into infrastructure projects, defense spending, climate initiatives, and the growing cost of aging populations. With an ever-increasing debt burden and escalating costs, the time to focus on essential spending is now. The challenge is clear: they need to prioritize spending on what matters and avoid getting trapped in a cycle of reckless borrowing and overspending. But the hard truth is that many are already behind the curve.
Looking at the markets, there’s a noticeable shift toward gold as a safe haven investment. In the face of this debt crisis, gold prices have been climbing, and analysts are now predicting even more upside. Citi Research has raised its price target for gold to $3,200 per ounce for the next three months, driven largely by strong demand from central banks and exchange-traded funds (ETFs). Some experts believe that gold could even hit $3,500 per ounce by the end of the year, as investors increasingly look for ways to protect their wealth from potential economic instability. Whether it’s fears of stagflation or a hard landing for the U.S. economy, gold is positioning itself as a financial lifeline in increasingly uncertain times.
I found this comment from Dr. Ron Paul — former three-time U.S. presidential candidate — especially powerful during our conversation:
"I think the biggest issue for the Federal Reserve is what they do in international finance… I think there are more bailouts than people… pic.twitter.com/gGsmYCdH7P
— Gold Telegraph ⚡ (@GoldTelegraph_) March 22, 2025
Sources:
https://finance.yahoo.com/news/citi-hikes-gold-price-target-133158478.html