The world is $152 TRILLION in DEBT - Global economic collapse looms as governments struggle

Too much wealth in the hands of too few is destabilizing the economy, but governments won't tax the rich.

The world is on track to enter a deep, global recession unless it begins paying down its debts. This is the risk the world faces as the International Monetary Fund reports the world is $152 trillion in debt.

LOS ANGELES, CA (California Network) - The world is deep in the red and it's getting worse. It's also nearly impossible to imagine how the global debt will be repaid.

According to the IMF, the world is $152 trillion in debt due to easy money policies of the world's top banks. Massive credit binges in countries like China have made the problem worse. If the world's banking sector faces trouble, a global recession could result that may destroy the banking industry.

Slow economic growth makes it hard to pay down the debt. As countries increase deficit spending to jump start their economies, the debt grows even more.

The problem is a lack of growth. Debt isn't a problem as long as growth keeps pace with the debt. Ideally, countries borrow money from banks to invest in infrastructure which stimulates business. As business activity grows so too do tax receipts which allows a nation to pay off its debts. In the long run, it is a win-win. Jobs are created, taxes are paid, and bankers make money in the process.

However, many nations are not in a position to pay back their debts. The borrowed money has gone to finance wars, or to provide tax breaks, and has not been invested in infrastructure. Tax breaks have been absorbed by the wealthy, but have not resulted in an economic boom.

At this time, countries need to deleverage -which means they need to pay down their debts. But to do this, they will need to raise taxes, particularly on the wealthy who now control a majority of the world's wealth. Doing this can be dangerous politically.

But failing to raise taxes on the wealthy can be dangerous financially, and an economic collapse would be even more dangerous politically as entire governments could be overturned. But politicians are short-term thinkers, easily manipulated by wealthy benefactors. The most likely result is that the rich will manipulate the political class to put off tax increases.

Politicians may also look to the poor and middle classes to deleverage the debt. This is an easy solution because the poor and middle class are not well represented in government. However, this can cause social dissatisfaction and unrest. Already, many governments are forced to subsidize their poor.

According to the IMF, the global financial system is under stress. A good shock is all it will take to trigger a global collapse. What happens next following a collapse is impossible to predict, but everything could change including entire governments, economic systems and more.

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