Yaqeen Articles

In the boardrooms of the City and Wall Street, "leverage" is celebrated as the engine of growth. But for a growing segment of the global population, that same engine has become a treadmill that never stops. As we navigate the economic landscape of late 2025, a provocative question is moving from the fringes of heterodox economics into the mainstream: Has our interest-based financial architecture evolved into a modern system of "debt bondage"?

For the economist, "debt bondage" is defined as a condition where an individual’s labor is pledged as security for a debt that, due to excessive interest or terms, can never realistically be repaid. When we look at the current global debt-to-GDP ratio—which has stabilized at a staggering 235%—the parallels are increasingly difficult to ignore.

1. The Mathematics of Perpetual Debt

The fundamental tension in an interest-based system lies in the divergence between arithmetic growth (the real economy) and exponential growth (compound interest).

While a nation's GDP might grow at a healthy 2–3% per year, credit card debt, payday loans, and high-yield sovereign bonds often carry interest rates far exceeding that. This creates a "wealth vacuum" where the productivity of the laborer is consumed by the servicing of the debt before it can ever touch the principal.

2. The Wealth Transfer: From Labor to Capital

Interest-based systems naturally facilitate a massive upward transfer of wealth. In 2025, the top 1% of the global population holds more wealth than the bottom 90% combined.

The mechanism is simple: those with capital lend it (collecting interest), while those without capital borrow it (paying interest). This creates a "rentier" economy where the owner of capital earns while they sleep, while the debtor must work more hours just to remain stationary. According to recent UNU-WIDER data, this concentration of financial power excludes billions from even basic economic stability.

3. The "Negative Budget" Phenomenon

In the UK and US, we are seeing the rise of the "Negative Budget" household. These are families where essential expenditure (food, energy, rent) plus interest payments exceeds total income.

• The Quicksand Effect: In 2025, Citizens Advice reported that the average debt client moved from a £19 surplus in 2019 to being £23 in the red every month.

• The Result: The debtor cannot "quit" their job or negotiate for better conditions because any interruption in cash flow leads to immediate default and the loss of their home or basic services. This loss of agency is the hallmark of bondage.

4. Institutionalizing the Cycle

The financial industry, while essential for detecting illicit flows, also acts as the "bridge" that sustains this cycle. By creating money "out of nothing" through fractional reserve banking and then charging interest on that created capital, the system requires a constant expansion of debt to maintain liquidity.

As the Bank of England's December 2025 Financial Stability Report notes, high leverage and stretched asset valuations (particularly in the $5 trillion AI sector) have made the global economy more vulnerable to "shocks" than at any time since the Global Financial Crisis. When interest rates rise, the "debt trigger" pulls back consumption, hitting the poorest the hardest.

5. Toward a More Just Architecture?

Critics of the current system, ranging from Islamic finance scholars to "Sovereign Money" advocates, suggest that the solution lies in Risk-Sharing rather than Interest-Bearing.

• Equity over Debt: Moving toward systems where the lender shares in the risk of the venture, rather than guaranteed interest regardless of the outcome.

• Universal Prevention: Implementing a "duty to prevent" homelessness and extreme debt through public policy interventions.

The Bottom Line

If the definition of freedom is the ability to direct one’s own life and labor, then a system that requires a lifetime of work to pay for the "privilege" of a loan is, at best, a compromised liberty. For the bankers and economists of tomorrow, the challenge is clear: build a financial system that serves humanity, rather than one that owns it.

Do you believe that a "Debt Jubilee" (mass debt forgiveness) is a viable solution to the 2025 global debt crisis?

🔗 Sources & Statistical Reports:

▪️ IMF: Global Debt Monitor 2025 - Trends in Public and Private Liabilities

▪️ Bank of England: The Debt Trigger - How Household Debt Amplifies Rate Shocks

▪️ Citizens Advice: The National Red Index 2025 - The Negative Budget Crisis

▪️ UNU-WIDER: Global Inequality and the Patterns of Credit Market Development

▪️ House of Commons Library: UK Household Debt Economic Indicators 2025