The question on everyone’s mind: Is debt going to trigger a crisis in OECD countries?

Debt ratios (public and private) are now extremely high in OECD countries. Instinctively, one wonders whether this might trigger another financial crisis. A first question concerns interest rates: as long as they remain very low, debt will not be a problem . R esurgent inflation could therefore trigger a crisis, which could happen once the participation rate (the proportion of the working-age population in the labour market) can rise no more . A second question concerns the risk of a crisis in the absence of a resurgence of inflation and rising interest rates. In this configuration, borrower solvency remains assured, but asset price bubbles appear. Can bubbles burst in the absence of a rise in interest rates? There is also a risk of flight from money, if an excessive quantity of money is created to keep interest rates low, leading investors to rotate into real assets (equities, real estate). But this leads back to the same question of bubbles. Altogether, the two major risks are: A resurgence of inflation when the participation rate stops rising (given the presence of several inflationary mechanisms: ageing, regionalisation of value chains, weak productivity gains, of course low unemployment); A bursting of asset price bubbles even in the absence of a rise in interest rates.