The world economy continues to slow as policy makers attempt to find additional ways in which to stimulate the economy, while simultaneously remaining committed to the existing accommodative monetary policies. The global economy is likely to grow by approximately 3% this year, a far cry from the over 5% achieved in 2010 (chart 1).
The low, or in many cases negative, interest rates do keep the economy afloat, but just barely. Many experts have urged for fiscal measures to complement existing monetary policies in order to stimulate the economy. However, this might be hard to achieve given how high developed world debt levels are today. Both public and non-public debt in the developed world has grown to approximately 265% of GDP (see chart 2). According to the below chart, the rising overall debt levels are primarily due to the public sector, which began its ascent after the great recession of…