The Looming Global Debt Crisis – According to Matthew Piepenburg

4th December, 2025

A global debt crisis is now a reality underpinning every major market signal we’re witnessing today. For more than half a century, policymakers, central bankers, and financial institutions have built an economic model fueled by debt expansion, asset inflation, and monetary intervention. Today, that model is reaching the point where no amount of clever accounting can disguise the underlying fragility.

In recent discussions, analysts such as Matthew Piepenburg have attempted to quantify the scale of the coming crisis, but numbers alone don’t capture its essence. What we are confronting is the accumulated consequences of decades of loose monetary policy malpractice – an era defined by suppressed interest rates, ballooning deficits, and the abandonment of sound money in 1971.

From an Austrian perspective, this story was always going to end the same way: malinvestment, distortion, and eventual collapse. This article explores the anatomy of the impending unraveling; how we got here, why the bond, stock, and real estate markets are all precariously perched on inflated valuations, and what the broad-based unwind will mean for the United States and the wider global financial system.

The Long Descent: How a Fiat System Created Today’s Instability

If one wants to understand the present, one must return to 1971, the year the U.S. severed the dollar’s final link to gold. Nixon’s closure of the gold window didn’t just alter monetary mechanics; it redefined the philosophical foundation of the global economy. Money, once anchored to an objective standard, became an instrument of policy – elastic, manipulable, and political.

From that moment, the global debt cycle became not only inevitable but necessary. Without a gold constraint, governments could borrow indefinitely, central banks could monetize that debt when markets balked, and financial institutions could leverage increasingly complex instruments without the discipline of real interest rates.

For a while, it seemed to work. Asset prices soared. Credit was always available. Boom cycles extended. The modern economy came to depend on debt-fueled growth as though it were a permanent feature of the landscape.

But an economic model built on ever-expanding leverage requires constant intervention. Every downturn becomes intolerable. Every crisis must be suppressed through more liquidity, more stimulus, more artificial support. As Piepenburg often stresses, this is not a glitch, it’s the system itself.

Today we are living through the final stages of that experiment, not because sentiment has turned pessimistic, but because arithmetic no longer works in favor of the policymakers who built this machine.

The Bond Market: Where the Global Debt Crisis Begins

Every major financial collapse begins in the bond market. It is the largest market in the world, the foundation for interest rates, valuations, corporate finance, currency strength, and sovereign credibility. When bonds break, everything breaks.

For decades, falling interest rates acted as a tailwind for governments, corporations, and investors. Declining yields meant rising bond prices, which created a self-reinforcing cycle of wealth effects and cheap financing. But this dynamic could only continue as long as inflation remained subdued and policymakers retained market confidence.

That era is over.

Real inflation (actual inflation, not its official, diluted counterpart) has destroyed the central bank’s ability to suppress yields indefinitely. Debt levels are now so enormous that even small increases in interest rates threaten to overwhelm government budgets. The U.S. already spends trillions annually on interest alone, and that number rises with every basis point on the yield curve.

This is the essence of the global debt crisis: sovereign liabilities have grown so large that maintaining confidence requires perpetual intervention, yet every intervention pushes the system closer to its breaking point.

Piepenburg’s framing is blunt but accurate: the bond market today is not priced by organic forces, but by emergency central bank policy. Without monetary support (whether explicit bond-buying or implicit liquidity injections) yields would rise sharply, exposing insolvency risks across the sovereign landscape.

In a functioning market, bonds would already be sending a catastrophic signal. That they are not is simply evidence of how distorted the system has become.

Stocks, Liquidity, and the Illusion of Prosperity

The equity markets tell a superficially different story i.e., strong price action, multi-decade highs, and trillions in market capitalization added in recent years. But underneath the surface lies a fragile structure dependent on the same artificial liquidity that props up the bond market.

Stocks have benefited from negative real rates, buybacks financed by cheap corporate debt, and the relentless search for yield in a world where bonds no longer offer real returns. The so-called “wealth effect” is not a reflection of genuine productivity but of monetary expansion that pushes investors into riskier assets out of necessity.

This is why stock valuations appear almost immune to bad economic news. The market has ceased behaving as a price discovery mechanism; it has become a liquidity thermometer. Asset prices rise not because earnings justify them, but because excess money must find a home.

However, when liquidity tightens, as it eventually must, equities are exposed. What we call a “market correction” is often just the withdrawal of artificial support. And given the current environment, the next withdrawal is unlikely to be gentle.

In an Austrian sense, the market is attempting to reconcile 50 years of mispricing. The longer distortion persists, the more violent the eventual normalization becomes. The U.S. stock market remains one of the most overvalued in history when measured by CAPE ratios, market-to-GDP, or price-to-sales. These are not the markers of stability, they are the markers of bubble dynamics in their final stage.

The Real Estate Super-Bubble

Real estate bubbles develop slowly but burst suddenly. With property markets, the danger lies in the lag. Prices continue climbing long after fundamentals have deteriorated, because investors are driven by recency bias and because credit conditions remain favorable right up until the point of collapse.

But the current real estate bubble is different in one critical way: it is synchronized globally. Years of ultra-low rates, excessive leverage, speculative buying, and institutional ownership have pushed residential and commercial property to unsustainable extremes.

Real estate valuations in the United States, Canada, the UK, Europe, and Australia are untethered from median incomes, rental yields, and business activity. Even small increases in mortgage rates can cripple affordability and expose the underlying fragility.

Institutional players know this, which is why commercial real estate markets are already experiencing defaults, price write-downs, and liquidity freezes.

As Piepenburg has noted, real estate markets are slow-motion disasters. They don’t collapse overnight; they erode, then accelerate, and finally capitulate. The shock comes when the illusion of stability disappears and owners realize that the only buyers left require drastically lower prices.

This sector alone could ignite the broader global debt crisis. When real estate cracks deeply enough, banks crack with it.

The Dollar, BRICS, and the Waning Age of Monetary Hegemony

The dollar’s dominance has long allowed the United States to delay the consequences of excess. Foreign nations, compelled by global trade and reserve demands, had little choice but to hold dollar-denominated assets. This external demand effectively subsidized American overconsumption and debt accumulation.

But that structural advantage is eroding.

The BRICS expansion, increased use of local currency settlement agreements, rising gold purchases from non-Western central banks, and the political weaponization of the dollar system have all accelerated global de-dollarization trends.

Piepenburg and others argue that the dollar’s credibility does not collapse suddenly, it bleeds out gradually as trading blocs diversify, as reserve managers reduce exposure, and as geopolitical fractures widen. When confidence in a currency erodes, it is nearly impossible to restore.

The U.S. still possesses significant advantages; deep capital markets, military leverage, and global financial influence, but the direction of travel is unmistakable. The world is slowly adapting to a future where the dollar is merely a strong currency, not the dominant one.

And when the U.S. can no longer export inflation abroad, the consequences of its own monetary mistakes come home with a vengeance.

The Central Bank Dilemma: Print or Perish

The Federal Reserve and its central bank counterparts face an impossible choice. They must either:

Allow markets to clear naturally, which would mean collapsing asset prices, a wave of defaults, a sovereign debt crisis, and a brutal recession; or
Continue expanding the money supply to support markets, backstop government debt, and prevent systemic failure; at the cost of further debasing the currency and eroding real purchasing power.

This is the classic Austrian dilemma: the bust is simply the unavoidable consequence of the preceding boom. The only decision left is whether the reckoning is deflationary (a collapse) or inflationary (a currency crisis).

History suggests policymakers will always choose the latter. They prefer stealth destruction of purchasing power to politically catastrophic austerity or mass defaults. That is why the long-term trajectory is one of monetary debasement – financial repression disguised as sophisticated policy.

Piepenburg frequently emphasizes the inevitability of this dynamic: debt levels have reached such grotesque proportions that no amount of fiscal discipline or GDP growth can resolve them organically. The debt can only be inflated away.

But debasement is not a cost-free option. The public eventually realizes what is happening. Inflation becomes entrenched. Confidence erodes. And once trust evaporates, even strong currencies can enter rapid decline.

The global debt crisis ensures that this choice is no longer theoretical. It is structural and imminent.

The Coming Unraveling: What the Next Crisis Looks Like

The next crisis will not resemble 2008. It will be broader, deeper, and more systemic.

2008 was a liquidity crisis largely contained within the banking and mortgage sectors. Policymakers could respond with massive stimulus because sovereign balance sheets were still relatively healthy. Today, sovereigns themselves are the most over-leveraged entities in the system.

The next crisis will likely feature:

Bond markets destabilizing as investors demand higher real yields.
Central banks forced to choose between liquidity support and currency stability.
Stock markets repricing sharply once artificial liquidity evaporates.
Real estate undergoing a painful revaluation cycle.
Bank solvency concerns emerging from commercial property exposure.
Recessionary forces colliding with inflationary pressures.
A global monetary shift toward alternative reserve assets, including gold.
Sovereign credit downgrades and rising geopolitical risk.

The crisis will not be a single event but a cascading series of failures and interventions, each one revealing deeper structural weaknesses.

The endgame is not the end of capitalism or the end of America, but the end of the current fiat-debt paradigm that has governed the world since the early 1970s. This transition will be turbulent, painful, and disorienting, particularly for societies accustomed to decades of artificial stability.

Yet from the Austrian vantage point, this is not a tragedy. It is simply the clearing of distortions that should never have been allowed to accumulate.

Conclusion: The Inevitable Reset

The global debt crisis is the consequence of choices made long ago; choices to replace sound money with political money, to suppress interest rates, to encourage leverage, and to postpone every recession through increasingly extreme interventions. Individuals like Matthew Piepenburg have been among the few to articulate this reality with clarity and honesty, but the warnings extend far beyond any single analyst.

History is unequivocal: no nation, empire, or monetary regime has escaped the consequences of debt accumulation and currency debasement. The only uncertainty is timing and form.

We are living through the late stage of a financial era built on the money-illusion and the idea that debt can rise forever – and that central banks can outmaneuver the laws of economics. That illusion is now dissolving.

When the reckoning arrives, it will not be a technical event. It will be a psychological shift; the moment when societies realize that what they believed was prosperity was, in fact, leverage; that what they believed was stability was, in fact, suppression; and that what they believed was money was, in fact, a claim on someone else’s debt.

The coming years will test assumptions, institutions, and currencies. But they will also reveal truths long obscured by decades of financial engineering.

And when the dust settles, perhaps the world will rediscover what the Austrian economists understood all along: prosperity built on sound money endures; prosperity built on fabricated credit never does.

Source:

Matthew Piepenburg - The Death of the Financial System

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Opinion Column

About the Author
Steve Bain is an economics writer and analyst with a BSc in Economics and experience in regional economic development for UK local government agencies. He explains economic theory and policy through clear, accessible writing informed by both academic training and real-world work.
Read Steve’s full bio

The Looming Global Debt Crisis – According to Matthew Piepenburg

The Long Descent: How a Fiat System Created Today’s Instability

The Bond Market: Where the Global Debt Crisis Begins

Stocks, Liquidity, and the Illusion of Prosperity

The Real Estate Super-Bubble

The Dollar, BRICS, and the Waning Age of Monetary Hegemony

The Central Bank Dilemma: Print or Perish

The Coming Unraveling: What the Next Crisis Looks Like

Conclusion: The Inevitable Reset

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