WASHINGTON (TND) — The increasingly large amount of global debt being taken out by countries around the world is creating a potentially painful road ahead for their populations as spending swells without enough tax intakes to pay for it.

Governments hold an unprecedented $91 trillion in debt after the coronavirus pandemic spurred public spending, a sum nearly equal to the size of the global economy. While the debt is not causing many issues yet, economists say it will pose a threat to living standards even in the world’s richest economies like the U.S.

Economists have started to ramp up warnings about the United States’ ballooning federal deficit, which is on pace to reach record levels in the next three years. The international Monetary Fund said in a report last week that the United States’ chronic deficit must be “urgently addressed” through realigning spending priorities and making adjustments to the way people are taxed.

Some of the risks created by the growing debt levels:

INCREASED BURDEN ON FUTURE GENERATIONS

Borrowing taken out today is going to be paid back by future generations that will feel the effects of having to service higher debt costs through higher rates, slowed income growth and fewer opportunities.

While they will not have to directly pay back that money, the government will have to offset those costs in some capacity during their lifetimes.

Future generations could be subjected to higher taxes or lower spending to deal with finances that are left in poor standing by today’s lawmakers. Higher taxes leave consumers with less disposable income and lower spending on government programs will limit the ability of safety net programs, investments like infrastructure repairs and upgrades or ability to respond to emergencies.

HIGHER INTEREST RATES AND COSTS

Higher national debt totals can lead to higher interest rates that create growing costs to both the government and consumers. Rates increasing makes it more expensive for governments to service the debt and increase costs for consumers through rates available through banks going up because of the bond markets that are highly influential on available rates.

As a government issues more bonds, lenders will demand higher interest rates to keep the return on them competitive with the return on other investment opportunities. Higher bond rates will have effects on other parts of the economy, increasing interest rates on mortgages, car loans, credit cards and other types of loans.

Americans are feeling the pressure of higher interest rates as part of the Federal Reserve’s crackdown on inflation. With the rapid increase of their benchmark interest rate, it has been significantly more expensive for Americans to finance vehicles, business loans or trying to purchase a home.

LESS MONEY FOR INVESTMENTS AND SOCIAL PROGRAMS

Higher interest rates and costs to servicing the debt could block out other investments from the federal government that can improve economic growth or provide help for its citizens.

Instead of paying for upgrades to airports, ports and roads that help power economies, governments will have to spend more on interest payments. Government spending is one of the primary ways to spur economic activity and the loss of it can cause slowdowns that take years to overcome without intervention.

In moments of catastrophe like the Great Recession after the 2008 financial crisis or the coronavirus pandemic, governments with disproportionately high debt burdens might be unable to respond as forcefully, which can lead to slower economic growth for longer.

CHRONIC U.S. DEFICITS MUST BE ‘URGENTLY ADDRESSED’

Economists have increasingly been warning about the United States’ need to address its growing debt burden that has exploded since the onset of the pandemic.

The nonpartisan Congressional Budget Office said in a report last month that the national debt is expected to be over $56 trillion by 2034 with spending and interest expenses outpacing revenue brought in from taxes.

This year’s budget deficit is projected to be $1.9 trillion and swell to an annual value of $2.9 trillion over the next 10 years. Measured as a share of the economy, the debt will grow to 122% of gross domestic product by 2034.

A report published last week by the International Monetary Fund said that the deficit continuing to grow unchecked could eventually lead to slower economic growth and could snowball into a global financial crisis.

“Now is a good time, the U.S. economy is very strong and it is in good times where you can do more to prepare yourself for risks in the future,” said Kristalina Georgieva, the IMF’s managing director.

DEBT COULD LEAD TO FINANCIAL CRISIS

Exactly when the debt becomes unsustainable is a bit of an unknown for economists to project and the onset of a fiscal crisis can come on rapidly.

Investors that would demand higher rates are willing to look past unbalanced budgets when the economy is strong and there are no other shocks like major policy switches, political turmoil or geopolitical events.

In the U.S., a strong economy, stable political and justice systems and full faith in paying back its debts has left it insulated from some of the most dire consequences of piling up a deficit. But that could change at some point if investors determine debt levels have reached unsustainable levels that no means of balancing the budget could solve.

“Fiscal conditions don’t matter until they do,” EY chief economist Gregory Daco wrote in a newsletter this week.

A fiscal crisis could look like a rapid devaluing of currency, like what happened to the U.K. in 2022 with the collapse of the pound or fears about the results of French elections. Another potential outcome could be rapid inflation caused by governments printing more money to pay off its debt, leading to rapid inflation.