@ai-summaries's thread

Part 4/17:

The post-World War II era, governed initially by the Bretton Woods system, limited how much could be borrowed—since currencies were pegged to gold and the US dollar. But in 1971, this system collapsed, leading to the era of fiat money—money not backed by gold—and a dramatic increase in borrowing freedom. Today, countries can borrow unlimited amounts in their own currencies, often refinancing old debts rather than paying them off, freeing the process of debt accumulation from traditional limits.

Historical Drivers of Debt Growth

Various crises have punctuated this growth:

• The oil shocks of the 1970s prompted government borrowing to subsidize energy costs.

• The 1980s savings and loan crisis and the Asian financial crisis of the 1990s further increased bailouts and borrowing.