There's a big wave coming and it's going to reshape the rest of the 2020s

Another $2.1 trillion of debt will be added to the European debt pile if those countries follow through with their promises to increase defence spending by 2030.

This is on top of the business-as-usual debt which is already coming through, including an additional $8.9 trillion from developing countries and $4.8 trillion from rich countries, according to IMF forecasts.

All up, an additional $23 trillion of debt will be created between now and 2030.

Sounds huge. Does it matter?

There are "definite bads", "probable very bads", and "improbable really bads" that could come from this.

The definite bads are the standard things that happen when you undertake crisis-levels of fiscal stimulus in the absence of a crisis. These include higher inflation, higher interest rates, and less private sector investment.

Fiscal stimulus during a crisis is a great thing. Because the private sector is weak, the increase in government spending essentially just fills a gap, meaning there's little to no increase in inflation or interest rates. It has the added benefit of avoiding recession and the long-term scarring effects of unemployment.

Outside of a crisis, it's the opposite. Most of the above $23 trillion will be borrowed. As governments compete with businesses and households to borrow from the same pool of savings, interest rates will rise, inflation will rise, private investment will fall.

Sure, governments could increase taxes or offset the spending elsewhere, or their central banks could buy the debt with printed money but, either way, households and businesses end up paying for it: either through upfront taxes, reduced services or the hidden tax of inflation.

So those are the "definite bads". What are the "probable very bads"? In short, a bunch of developing countries will probably suffer debt crises.

Debt statistics give insight into which countries are in trouble. It's possible that a big increase in government debt is because governments are undertaking sensible, nation-building investments in things like infrastructure. But, sadly, it's usually a sign that governments are getting into trouble.

When we look at the top five countries in the world that will see the biggest increases in debt by 2030, our Pacific neighbours make up three of them: Kiribati, Tuvalu and Tonga will see debt increase by 295 per cent, 250 per cent and 132 per cent, respectively. They are starting from a low base, but this rate of growth is worrying.

The group of countries that will see the largest increase in debt between now and 2030 are developing countries in Asia. Their collective debt is expected to increase by more than 20 per cent by 2030.

These are the countries least able to manage big increases in debt. Financial markets cut rich countries a lot of slack because they know that they are big, rich and could get more money if they needed it.

This is not true for developing countries. If markets sour on these countries, they could charge them substantially higher interest rates and, at some point, will only lend to them if it's in US dollars.

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Once this happens, all it takes for a debt crisis to erupt is an appreciation in the US dollar. With the US government massively increasing its own spending, this is more likely than not, and many countries are already borrowing heavily in US dollars.

Australia is very unlikely to have a debt crisis, but if countries in the Asia-Pacific get into trouble, there will be a lot of pressure for Australia to help. This is annoying timing given the federal government already has its own fiscally irresponsible dependents - known as the states and territories - who, led by Victoria, will see their debt more than double from $200 billion in 2022-23 to more than $460 billion by 2027-28.

So, debt crises in developing countries are the "probable very bads". What are the "improbable really bads"? This is where Trump comes in.

Trump's reckless policies are driving a global repricing of risk. The US is traditionally seen to be the ultimate global safe haven, meaning that, when times get risky, investors park their money in US dollars and US bonds.

Trump appears to be changing this. Trump has shaken investor confidence in the United States through his tariffs, chaotic trade policies, his undermining of global and domestic institutions and, now, his big increases in debt.

Global risk has increased, but investors have not flocked to the United States. Rather, people have taken money out of US assets and moved it into assets in other countries.

If this continues, there is a point at which the US starts facing major debt problems. If market trust in the US continues to fall, the cost of servicing US debt will increase sharply, potentially forcing a big cut in US spending and big increase in US taxes.

This would represent a major turning point in the global economic and political order, with huge ramifications for the rest of the world, both financial and political.

The good news is that this is unlikely. The bad news is that there are plenty of other challenges that will come from a much more indebted world.

If there was a time for Australia to get its house in order, it's now.