Project SyndicateProject Syndicate

Strengthening the global balance sheet

By Olivia White, Jonathan Woetzel and Jan Mischke

3 min read

informed Summary

  1. The world economy could look markedly different in the next ten years than it did in the last 20, according to this column in PS. The range of possible paths forward is wide and uncertain.

SAN FRANCISCO – In recent decades, the world’s wealth has soared – at least on paper – as low interest rates drove up asset prices. But the global balance sheet remains rife with fragilities, which recent financial-sector turbulence has exposed. Now, how the world borrows, lends, and creates wealth may be set to change fundamentally.

From 2000 to 2021, asset-price inflation created about $160 trillion in paper wealth. But while asset valuations grew rapidly, investment and growth remained sluggish. Moreover, every $1 in investment generated $1.90 in debt. But, recently, headwinds have confronted the world economy: in 2022, households lost $8 trillion of wealth.

Sign in to informed

  • Curated articles from premium publishers, ad-free
  • Concise Daily Briefs with quick-read summaries
  • Read, listen, save for later, or enjoy offline
  • Enjoy personalized content