Nothing Stops This Train: How the Global Financial System is Hitting its Limits.

2025-06-15 by Wesley Luth

Introduction:

There are moments in history when systems begin to show signs of exhaustion. When numbers don’t just fluctuate — they spiral out of control. When governments stop leading and start reacting. The global economy — from Washington to Frankfurt, from Tokyo to Brussels — seems to be in such a phase.

And the train keeps barreling forward.

Given these realities, here are 5 forces impacting the global economy—and why it matters. 👊

1. Structural Deficits: No Longer a Temporary Problem

What began as temporary economic relief during crises has now become embedded in the foundations of modern economies: chronic deficits. The United States consistently spends more than it earns. But the same holds true in Europe, Japan, and many other developed nations. Within the eurozone, the Stability and Growth Pact — once designed to keep deficits and debts in check — has been routinely stretched or outright ignored. During the COVID pandemic, budget rules were temporarily suspended, but many countries never returned to a sustainable path. Italy, France, Belgium, and even Germany — long seen as a champion of fiscal discipline — are now struggling with rising debt loads and a lack of political will to address them.

2. Interest Rates: A Band-Aid, Not a Cure

Central banks have played a crucial role in covering up these deficits. The Federal Reserve, the European Central Bank (ECB), and the Bank of Japan spent years buying up government debt, indirectly funding deficits through quantitative easing (QE) and keeping interest rates artificially low. But then inflation came back. Since 2021, nearly all major economies have seen a sudden surge in consumer prices — driven by post-COVID stimulus, supply chain disruptions, and energy price shocks. Central banks had to act, raising rates aggressively. But instead of calming the system, this move exposed its Achilles’ heel. Higher interest rates also mean higher interest payments on existing debt. Governments that had grown used to borrowing cheaply are now watching their debt service costs explode. In Italy, bond yields are rising to levels that threaten long-term sustainability. France now spends more on interest than on its military. And in the U.S., interest payments have surpassed the defense budget.

3. The Global Debt Machine

Since the 2008 financial crisis, global debt has tripled. And it’s not just governments — households, businesses, and banks have all become reliant on cheap credit. The world economy has become like a shark: it has to keep swimming (read: growing and borrowing) or it sinks. The result? Austerity is politically toxic. Tax hikes face fierce public resistance. So governments keep doing what’s easiest: borrowing more. And when markets start to panic, central banks jump in again with fresh liquidity injections. It’s no longer a strategy — it’s a reflex.

4. The Flip Side: Erosion of Trust

This cycle — of permanently low interest rates, debt creation, and monetary easing — has one inevitable consequence: the erosion of trust in fiat currencies. Whether it's the euro, dollar, yen, or pound, all these currencies are losing purchasing power over time. Not all at once, but gradually. Imperceptible year to year, but unmistakable over a decade or two. People are watching their savings evaporate. Pension funds are struggling to deliver real returns. Younger generations are realizing they’re paying more in taxes for fewer guarantees. Confidence is fraying — and that shift is beginning to show in behavior.

5. Bitcoin as an Alternative Foundation

In a world dominated by expansive monetary policy, unsustainable debt, and politically entangled central banks, more people are starting to look for an alternative. Not out of speculation — but out of necessity. Bitcoin represents that alternative. A digital asset with a fixed issuance structure, immune to political interference, and built on transparency and scarcity. Where governments can always create more money, bitcoin is capped at 21 million. That makes it fundamentally different from any monetary system humanity has ever known. For some countries, bitcoin offers immediate protection. In high-inflation economies like Argentina or Nigeria, it already functions as a refuge for savings. But interest is also growing in the West — not necessarily as a day-to-day currency, but as a digital counterpart to gold: a hedge against systemic failure.

Conclusion: The Train Keeps Moving — But Where To?

The debt engine is running at full speed. Central banks are trying to steer, but their tools are either ineffective or create new forms of instability. Governments have no political room left for meaningful reform. And so the train keeps rushing forward — toward a destination no one can quite see. In this landscape, the appeal of a system outside the current one is growing. Not to replace everything, but to offer a foundation that is truly stable. An anchor in a sea of shifting tectonic plates. Bitcoin might not answer every question — but at the very least, it forces us to ask the right ones.