The world is unlikely to face another crisis like those of 2008 or 2011. No central bank or government will allow it.

You might consider this good news, but the reality is more complex. It signals a trend of ongoing stagnation and crises for wage earners and the middle class. Many people find themselves struggling to make ends meet, while governments tout their economic stability.

A crisis often reflects past excesses. When governments focus on wise investments, sound public finances, and fair taxation, crises tend to resolve quickly, leading to stronger recoveries. Conversely, when they position themselves as the solution—masking economic imbalances with increased spending, debt, and taxes—they create a significant transfer of wealth from the private sector to themselves. This results in persistent inflation, higher taxes, stunted growth, and diminished real wages for taxpayers.

Commentators frequently warn of an impending collapse reminiscent of 2008 or a debt crisis fueled by the unsustainable fiscal situations of developed nations. However, it won’t unfold that way. A sovereign debt bubble doesn’t burst like a real estate one; it collapses through a relentless cycle of inflation, stagnation, and punitive taxes. This crisis unfolds slowly but surely, impacting your finances directly.

We are now in an era defined by rising public debt, aggressive fiscal measures, and the financial repression of savers and the middle class. This ongoing crisis differs from a sudden crash; it’s characterized by the gradual erosion of purchasing power, productivity, and living standards. This decline is driven by continuous public debt expansion and policies that overlook necessary deleveraging or structural reforms, instead imposing higher taxes on productive sectors.

Developed nations have surpassed all limits of indebtedness, while global central banks are shying away from sovereign debt and boosting their gold reserves.

The Economic Limits

• Economic Limit: Increased government spending and public debt lead to lower growth and the impoverishment of citizens in real terms.
• Fiscal Limit: Low interest rates coupled with high taxes result in significant deficits and rising interest costs.
• Inflationary Limit: More government spending means more money in circulation, fueling persistent inflation.

The debt crises in France, Britain, Japan, and the US may become unavoidable without substantial spending cuts. As these crises develop, the process of impoverishment will be slow and painful, accompanied by a decline in fiat money value.

By 2025, global debt is projected to hit a staggering $337.7 trillion, amounting to 324% of global GDP, primarily driven by the public sector. France, the UK, and Japan have ignored warning signs amid years of low rates and misguided fiscal stimulus, leading to massive budget deficits and debt levels nearing or exceeding 100% of GDP.

France serves as a cautionary tale regarding government control over the economy. It has never implemented austerity measures; instead, excessive government spending and harmful taxation prevail. Today, government debt exceeds 116% of GDP, with interest payments tripling from €26 billion in 2020 to €66 billion now.

If high government spending and taxes were effective tools for growth, France would be a global economic leader. Instead, it faces secular stagnation. High taxes do not reduce debt; they justify it.

In Britain, long-term borrowing costs have surged to levels unseen since 1998, driven by poor growth, unchecked spending, and rising inflation exacerbated by higher taxes.

Japan, once viewed as a perfect Keynesian model of rising debt without risk, is no longer immune. With debt nearing 260% of GDP, yields on Japanese government bonds have reached record highs, prompting the prime minister to declare that Japan’s situation is “worse than Greece.”

Yields on 10-year notes in developed nations have also surged. Credit markets no longer view government debt as a safe bet; instead, borrowing costs are escalating rapidly despite interest rate cuts, highlighting the risk of a solvency crisis.

Even central banks are distancing themselves from developed nations’ debt. Once the steadfast buyers of sovereign bonds, they are now increasing gold purchases at an unprecedented rate. In 2025, central banks collectively acquired over 1,000 metric tonnes of gold for the third consecutive year, pushing global reserves above 36,000 tonnes. A significant 95% of central banks plan to further boost their gold reserves in the coming year, marking a shift where gold holdings now surpass US Treasuries and euro area bonds as primary reserve assets.

The sovereign debt bubble is imploding, leading to a slow, painful process of financial repression and destruction of the middle class. Policymakers are opting for chronic crisis management over the risk of a dramatic crisis like in 2008, allowing fiscal irresponsibility to prevail while ignoring warnings about the scale of their imbalances.

The ongoing crisis will make wage earners poorer and foster a dependent subclass unable to save or invest. Real interest rates will remain negative, and the money supply will grow faster than productive output.

We may not witness a sudden, headline-grabbing crisis; instead, it will be gradual and painful, as it is already unfolding. Monetary policies and government spending that devalue currency will continue to inflate asset prices, including gold.

This is why market participants often cheer the same policies that undermine the economy: they see asset prices rising even as the currency loses value. The world faces a slow-motion erosion of currency purchasing power. Inflation remains a constant threat, diminishing wages and savings. Resources are diverted from innovation to servicing debt and government bureaucracy, stalling productivity growth. Consequently, the middle class endures higher taxes and persistent inflation, eroding disposable incomes and social mobility.

This situation is not merely a product of government incompetence; it’s a deliberate strategy to cultivate a dependent subclass reliant on government assistance, suppressing financial freedom. The next time you request free services from the government, remember that you’ll ultimately pay for them—many times over.