The global interest bill is about to jump

NEVER BEFOREGDPGDP has the world economy been so indebted. The stock of global debt has gone from $83trn in 2000 to around $295trn in 2021—a rate nearly double the pace of world growth. Debt rose from 230% of in 2000 to 320% on the eve of the pandemic, before covid-19 propelled it to the even greater height of 355% last year.Part of the reason for this explosion has been the steady decline in borrowing costs over the past two decades. In early 2000 a ten-year Treasury offered a yield of 6.5%. Today it pays 1.8%. The Federal Reserve’s effective policy rate has fallen from 6.5% to around 0.08% in that time. Benchmark rates in the euro area and Japan are sub-zero. Declines in government-bond yields and central banks’ policy rates have fed through to loan rates for private borrowers.