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Exponential Growth in Global Debt - A Blue Print for Financial Domination by Planners of True Genius

Onoh John Okey PhD, Prof. Gbalam, Peter Eze

Abstract

The exponential growth of global debt, standing at $315 trillion in 2023, has perpetuated a system of financial domination, concentrating wealth among elites and exacerbating inequality. This study investigates the mechanisms driving this "debt trap" and its socioeconomic impacts, addressing the problem of perpetual interest payments funneling resources from borrowers (governments, taxpayers) to creditors (central banks, institutional investors, wealthy elites). The global debt system, designed to ensure perpetual interest payments, has led to unprecedented debt accumulation, heightened financial instability, and widened wealth inequality. Central banks and institutional investors leverage government debt for profit, entrenching a cycle of debt-driven financial domination. The research objectives were: (1) Examine the historical evolution of the global debt system (2000-2023), (2) Analyze mechanisms perpetuating the debt trap, (3) Assess socioeconomic impacts on wealth distribution and financial stability, and (4) Evaluate pathways for mitigating or escaping the debt trap without systemic collapse. The study employs a quantitative design using secondary time-series data (2000-2023) from IMF, World Bank, BIS, and central banks. Hypotheses were tested using time-series regression, Granger causality, and unit root tests. Proxies included global debt, central bank assets, Gini coefficient, and financial stress indexes. Key findings: Global debt rose from $87.3 trillion (2000) to $315 trillion (2023), coinciding with rising Gini (0.62 to 0.70) and Top 1% wealth share (34.6% to 45.5%). Regression results showed global debt and central bank assets significantly increased inequality (Gini: β = 0.0002, p < 0.01; β = 0.0015, p < 0.05). Central bank and institutional investor holdings boosted bond returns (p < 0.05). Govt. interest payments and debt service worsened wealth inequality (p < 0.05). Debt-to-GDP and bond purchases raised financial stress (p < 0.01). Granger causality indicated debt drove inequality and financial stress (p < 0.05). All hypotheses were accepted, aligning with literature on debt-driven inequality (Piketty, 2014; Graeber, 2011; Stiglitz, 2012). The global debt system perpetuates financial domination, funneling wealth to elites via interest payments. Recommendations include: (1) Implement debt restructuring with safeguards to reduce inequality (Stiglitz, 2012), (2) Enhance central bank transparency on bond holdings, (3) Regulate institutional investors’ debt leverage, (4) Target progressive debt relief to low-income borrowers (Oxfam, 2022), and (5) Strengthen IMF/BIS oversight of debt thresholds.

Keywords

Global DebtFinancial DominationWealth InequalityCentral BanksInstitutional InvestorsDebt TrapSystemic RiskDebt Restructuring.

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