Authors of today economic magazine article Gita Gopinath who was Former Chief Economist of the IMF.
One of most important Article,must read it clearful ,Article in simple ways ,but not exact words .
Wealth here means:Stock market value,Bonds,Property prices,Pensions,Financial assets
(⚠️ This is not cash disappearing, but value falling on paper.)
Example:Your house was worth $200,000,After a crisis, it is worth $150,000.You “lost” $50,000 in wealth (even if you didn’t sell)
2. Why is the world at risk right now?
The article explains four big dangers:
(a) High interest rates
Central banks raised rates to fight inflation
A: High rates:
Reduce stock prices
Reduce bond prices
Hurt property markets
Slow business investment
📉 Result: Asset prices fall together
(b) Overpriced markets
Many assets became too expensive after years of cheap money
Stocks, real estate, and bonds were priced for “perfect conditions”
If reality changes → prices correct sharply
(c) Heavy global debt
Governments, companies, and households owe huge debt
B: When interest rates rise:
Debt becomes harder to repay
Defaults increase
Financial stress spreads
💥 This can trigger panic selling
(d) Investors’ fear spreads fast
C: When investors fear losses:
They sell risky assets
Move to cash or safe assets
This creates a chain reaction
➡️ Fear → selling → falling prices → more fear
3. Why could losses reach $35 trillion?
Global financial markets are extremely large
Even a 10–20% fall across:
US stocks
European markets
Emerging markets
Bonds
Property
📊 Can easily destroy tens of trillions in market value
So $35 trillion is not exaggerated.
4.Is this like 2008?
The article says:
❌ Not exactly the same
✅ But risks are serious
Differences:
Banks are stronger than 2008
Regulations are better
But:
Debt is higher
Geopolitics is worse
Global coordination is weaker
5. Biggest warning of the article
Markets have been too comfortable for too long.
If:
Inflation returns
Rates stay high longer
Growth slows
📉 Then a large correction is very possible.
6. What should policymakers do? (author’s advice)
Avoid sudden policy shocks
Communicate clearly
Prepare financial safety nets
Monitor fragile countries and institutions
Oneline summary 👇
If high interest rates,heavy debt,and investor fear collide,global markets could lose around $35 trillion in value,not because money vanishes,but because asset prices crash together.
It is not the original article,If you want read the original article, you can read it in economics magazine.
always DYOR, it is just information purpose.
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