Debt is fine as long as you are earning enough.

According to the latest report from the International Monetary Fund, the global economy is expanding at its fastest rate since 2011. But there is a growing risk which is not getting adequate attention. "The latest Fiscal Monitor of the IMF, released last week, noted that global debt at the end of 2016 was 225% of the Gross Domestic Product (GDP), which is 12 percentage points higher than the previous peak of 2009, when governments were on a deficit spending spree to prevent economic collapse," wrote an editorial in the Mint. The global debt had risen to $164 trillion in 2016. The rise of private sector debt, especially in China is a worry. Japan's debt to GDP ratio last year was at 236%, Italy was at 132% while the US was at 108%. US budget deficit is projected to surpass $1 trillion by 2020. Of emerging markets, Brazil's debt to GDP ratio stood at 84% while India was at 70.2%. Total GDP of the entire world was around $75.4 trillion in 2016. The US Federal Reserve is committed to increasing interest rate at least twice more this year but, if the economy grows faster pushing inflation above 2% it may be forced to tighten monetary policy faster. That would increase the cost of servicing this huge debt that has piled up. Already, "yields on two-year US government bonds have risen to their highest level since the financial crisis". Secondly, the fast growth in the US economy may not last and a slowdown in the global economy "will make debt servicing more difficult". Third, "General government debt in emerging markets and middle income-economies is expected to go up from 37.4% of GDP in 2012 to 52.9% of GDP in 2019". With rising interest costs governments will have less money to spend on infrastructure. And finally, in the event of a recession, governments will not be able to borrow to stimulate their economies when they are already loaded with debt. A study of 24 advanced economies in the post-war period by CD Romer and DH Romer showed that output declined by only 1% in a recession if the government could resort to fiscal and monetary stimulus, but "the output declines by about 10% when it doesn't have the policy space to respond". Central banks are worried that a trade war will lower growth rate while higher tariffs may be inflationary. Facing stagflation central banks may not be able to use a "monetary policy put" to ease the situation. "India may become a surprise victim of trade war," said Rabobank, giving different scenarios which could be very damaging for our economy. When you are weak you become roadkill.