A recent report from the OECD underscores the escalating global debt crisis, which has been worsened by rising interest rates.

The total value of government and corporate bonds within the OECD has exceeded $100 trillion, with borrowing reaching $25 trillion in 2024, nearly tripling levels seen in 2007.

Much of this increased borrowing can be traced back to responses to the 2008 financial crisis and pandemic-related measures, primarily aimed at funding corporate bailouts and handouts.

Debt accumulation occurred during a period of ultra-low interest rates, but inflation starting in 2021 has led to rising interest rates, creating challenges in debt servicing.

As a result, debt service costs for OECD member countries have surged to 3.3% of GDP in 2024, up from 2.4% in 2021, totaling over $2 trillion.

In the U.S., government debt has reached $36 trillion, with interest payments projected to become the largest budget item, pushing the debt-to-GDP ratio to an expected 109% by 2027.

While major economies have not yet faced significant defaults, there is a trend towards shortening debt maturities to address investor shortages, particularly in the U.S. with a shift towards more short-term bonds.

By the end of 2024, a significant portion of debt across OECD countries will require refinancing at higher rates, with 45% of sovereign debt and one-third of corporate debt maturing by 2027.

To tackle these challenges, the report suggests that governments may need to implement structural reforms and efficiency measures, which could result in cuts to public spending that affect social services and the working class.

As central banks engage in quantitative tightening, the demand for debt from new investors may lead to increased market volatility, influenced by geopolitical tensions and trade uncertainties.

The OECD report also highlights a concerning disconnect between corporate debt growth and productive investment, warning that much of the debt has financed financial operations rather than contributing to real economic growth.

In Australia, the Labor government has reported rising debt levels, with government debt surpassing $1 trillion and interest costs increasing at a rate of 9.5%.

The report implies that the ruling classes are increasingly resorting to militarization and austerity measures, suggesting a deeper crisis within the capitalist system.