Global Trade and Finance 6: Global Debt, Trade Shifts, and Stablecoins

Author(s): Scott Douglas Jacobsen

Publication (Outlet/Website): The Good Men Project

Publication Date (yyyy/mm/dd): 2025/11/03

Michael Ashley Schulman, CFA, Chief Investment Officer of Running Point Capital Advisors, offers expert insight into current global financial dynamics. Schulman offers timely insights into macroeconomic trends, US fiscal policy, and the global tech landscape.

In this interview with Scott Douglas Jacobsen, Michael Ashley Schulman, CFA, Chief Investment Officer of Running Point Capital Advisors, analyzes global financial dynamics amid a surge in debt, shifting trade flows, and emerging digital currencies. Schulman explains how global debt ballooned to $338 trillion in the first half of 2025, the fading effects of front-loading ahead of tariff hikes, and the risks flagged by the BIS regarding fiscal sustainability. He also unpacks UNCTAD’s warnings on policy uncertainty, the one-year extension of AGOA, and the IMF’s framework on stablecoins. Schulman emphasizes clarity, fiscal discipline, and innovation as critical for investors.

Interview conducted September 25, 2025, in the morning. 

Scott Douglas Jacobsen: Global debt neared $338 trillion. What drove the H1 surge? (Reuters)

Michael Ashley Schulman: Credit cards, Labubu dolls, and Pop Demon Hunters merchandise, obviously. 

However, seriously, there are several reasons for the debt surge, and we have regularly briefed our investment clients on them. First, cheapish money came back. Borrowing got easier and less expensive than it was a couple of years ago; therefore, corporate CFOs hit the refinance button on their liabilities, pushed out maturity dates, added a little to their debt stack, and provided some financing cushion for those prescient enough to forecast turbulence coming from the US’s new administration.

Second, the US dollar softened; this means that the dollar lost a little strength versus other currencies, which makes dollar debts slightly easier to manage for non-U.S. borrowers (like emerging market governments and foreign companies) and that can nudge global liquidity up. Third, governments and companies rushed to lock in longer-maturity loans and bonds, so they would not have to refinance at possibly worse rates. Fourth, many foreign central banks had already been ahead of the Fed in lowering rates over the last 12 months, making their own local currency debt easier to shoulder.

To summarize, borrowing costs eased slightly, and the US dollar lost some momentum, prompting governments and companies to rush to lock in longer-dated loans before interest rates increased again. The result is more total debt now and lower refinancing pressure for the next couple of years, but bigger interest bills down the road, especially if the dollar firms back up. Thus, that’s how liabilities ballooned by a mere $21 trillion (with a “t”) in six months to $337.7 trillion. Think of it as the fiscal version of “buy now, cry later”.

The biggest players were the usual suspects: the U.S., China, Japan, France, the UK, and Germany. The new normal seems to be higher debt-to-GDP ratios!

This means that duration risk (or interest rate sensitivity) has increased for balance sheets, and rollover walls have become taller for emerging markets. Apologies, I’m using jargon; a rollover wall is a large cluster of debt that all comes due around the same time.

The risk is that this surge is like pumping helium into an already stretched balloon; it’s fun unless it pops. For the US, higher debt servicing eats into fiscal flexibility; for emerging markets, FX or foreign exchange risk can become a ticking time bomb in the next downcycle. Conservative investors may want to consider biasing toward issuers with steady cash flows and room in their budgets, and be choosy with respect to highly indebted names that need constant access to markets.

Jacobsen: Front-loading ahead of tariff hikes propped up trade in H1. How does the OECD Interim Outlook expect unwinding into Q4?

Schulman: Companies wisely panic-bought early and pulled orders forward before higher US tariffs; in other words, they stuffed their supply chains to the gills, which is basically the macro equivalent of carb-loading before a marathon you’re not trained to run. I call this warehouse first, argue later. We’ve often spoken with our ultra-high-net-worth clients who are business owners about this.

Front-loading propped up first-half trade numbers and pulled sales forward, which will then leave a softer patch as inventories get worked down. The Organization for Economic Co-operation and Development (OECD) is saying the same. As we move into year-end, the surge fades, and shipping may slow versus last year. Akin to what we’ve discussed previously, expect softer global growth and choppier margins as supply chains rebalance.

This could be temporarily troubling for export-driven economies such as Germany, Korea, and those in Southeast Asia. It isn’t or won’t be a slowdown so much as it will be the echo of demand that was pulled forward.

For investors, don’t just read the data, read the room. Political risk is a macro driver, not a footnote! Investors might question whether to chase the ‘everything’s booming’ story versus favouring steady service sectors, artificial intelligence capital expenditure beneficiaries, and firms that aren’t one tariff headline away from a migraine. Analysts are leaning into companies with pricing power and shorter supply chains, while being wary of manufacturers that operate on thin margins and have long shipping routes.

Jacobsen: Yield curves steepened. Risk assets rallied. What fiscal risks does the BIS Quarterly Review (Sept 2025) see here? 

Schulman: The Bank for International Settlements (BIS) risk list is not a cheery read, but you’d expect a list of risks to look rather dismal, right? BIS is waving a red flag, concerned about a divergence between buoyant stock markets, driven by investor optimism, and the bond market’s rising anxiety over government debt, which the growing premium investors highlight demand for holding long-term government bonds. This is not new; the BIS has flagged government debt trajectories and the lack of fiscal discipline as the most serious threat to macroeconomic and financial stability for some time. Rising government debt, investment market vulnerability from leverage, fiscal sustainability concerns evidenced by a US debt downgrade earlier this year and rising bond yields in France, are newer to the list next to longer-term concerns, including climate-related costs, growing public-sector funding needs, and the potential for a doom-loop between governments and banks in emerging markets. 

So, yes, long-term interest rates rose, and paradoxically, stocks climbed as different sets of investors envisioned near-term growth hopes, while others saw bigger borrowing costs down the road. Governments running persistent deficits will feel the pinch as interest consumes a fatter slice of tax revenue; that means less room for new programs or tax cuts without some sort of trade-offs.

Risk-averse investors may want to maintain some high-quality credit investments or bonds as ballast in their portfolios and prefer companies that can fund themselves without tapping markets every quarter, and avoid overpaying for stories that only work when money remains easy. Historically, steeper yield curves have warned that we are in a late-cycle economy, but they don’t always get it right.

We could see a slight stock market pullback in October, especially if the US government shuts down, but hopefully followed by a bounce back in November or December!

Jacobsen: UNCTAD’s Global Trade Update (Sept 2025) flags policy uncertainty as a deeper drag than tariffs. Any thoughts?

Schulman: Agreed. Tariffs you can price; policy whiplash you can’t. A known tariff is like a speed bump;; you slow down and keep going. Policy. Policy flip-flops, on the other hand, are road closures, where you stop, reroute, make a U-turn, or cancel the trip. We’ve walked our multifamily office clients through these scenarios. 

For multinationals and supply chains, this is a whack-a-mole environment. The UN Trade and Development (UNCTAD) September update attributes the drag or slowdown to rule changes, carve-outs, and sudden restrictions that force more costly and longer routes, as well as freeze capital expenditures. Unclear rules, surprise bans, and shifting exemptions are toxins in business planning; they delay investment and reroute supply chains in costly ways. Government subsidies and credit lines for businesses are a band-aid; the real fix is clearer timelines and fewer sudden rule changes.

Some investment analysts are rewarding companies with logistic chains that have contractual visibility and diversified lanes, not just the lowest bill of lading. Single-path supply chains are potential Halloween horror flicks.

Jacobsen: With a reported one-year African Growth and Opportunity Act (AGOA) extension amid US tariff shifts, how much cushion would that give exporters? 

Schulman: You are into acronyms today, aren’t you? Too many of them and we might become acro-numb, lol.

The African Growth and Opportunity Act (AGOA) was signed into law a quarter century ago by Bill Clinton and is set to expire at the end of September. A one-year AGOA extension is akin to giving someone 12 more months on a lease, generous if you’re a fruit fly. It’s a geopolitical olive branch in a tariff storm, offering African exporters a small, temporary moat against rising protectionism. A year buys some time, but not certainty. It’s an extension to avoid an immediate cutoff of preferential, duty-free access to the American market on more than 1,800 African products from over 30 countries, and to avoid significant economic disruption. That’s enough to keep apparel and auto supply chains from seizing up, but too short to make big new factory bets. US credibility as a long-term partner versus China and other global players is also on the line here, and our credibility is wobbling like Jell-O. For US buyers, the extension offers modest price stability; for African exporters, their payrolls are temporarily saved while their capital expenditures are deferred. 

Investors may see near-term relief for listed apparel buyers and investment-grade African sovereigns; however, the medium-term outlook hinges on a multi-year renewal.

Jacobsen: As stablecoins spread, what policy trade-offs top the list in the IMF’s September coverage?

Schulman: I’ve spoken to some of our family office clients about this. Stablecoins are like AI (artificial intelligence); everyone wants in, no one knows how to regulate it, and somebody’s probably lying about capabilities. The IMF’s September brief lays it bare; they say you can’t have stability, innovation, and monetary control all at once. Pick two. It’s the Monetary Trilemma, Web3 Edition.

The fascinating thing to me is the disconnect between the IMF and the US regarding stablecoins, and I’ve pointed this out in past conversations. The IMF sees stablecoins as a potential systemic risk if left to float freely outside central bank control; thus, they lean heavily toward having central banks or some equivalent public authority retain a leading role in settlement, oversight, or even synthetic central bank digital coin (CBDC) models, where private issuance is tightly tethered to public liabilities.

America, on the other hand, has explicitly legislated against giving its central bank, the Federal Reserve, retail CBDC powers. An executive order issued earlier this year effectively prohibits government agencies from issuing or promoting a CBDC domestically. The US is threading a middle path via the GENIUS Act, which has already been signed, allowing regulated institutions, such as banks, insured depositories, and approved non-banks, to issue payment stablecoins under tight reserve, supervision, and non-interest rules with 100% private reserve backing and transparency. So stablecoins are allowed, but the Fed won’t be the issuer. The US is betting innovation works better when the state is more of a referee than a player.

The IMF worries that if private stablecoins become de facto money in other jurisdictions, especially in countries with weak local currencies, central banks could lose monetary control. The US model provides private players with that function, although with tight oversight, betting that the dollar’s dominance and trust will curb excesses. As you can tell, this fascinates me. I could go down a rabbit hole here, but I will refrain.

From an investor’s point of view, regulatory clarity will likely help solidify the winners, namely fully reserved, well-supervised,, and compliant issuers. The long-term losers are probably those that are under-collateralized and opaque.

Jacobsen: Any closing remarks?

Schulman: Thanks, yes, in summary, for trade, the first half of 2025 was front-loaded and Q4 will be the comedown with tariff drag and policy jitters. Big picture, the world is racking up debt like a teenager with a new credit card, trade is jumpy like it just downed three Red Bulls, and the BIS is flagging fiscal policy like it’s an overhyped IPO. As long as economies continue to grow, debt burdens are manageable, and we can potentially outgrow them and inflate them away. Meanwhile, stablecoins are spreading faster than a viral TikTok video. In this macro circus, policy clarity is the real unicorn.

As always, thank you for your timely questions and the opportunity to share with your readers the same perspectives, insights, and guidance we provide to our family office clients.

Jacobsen: Thank you for the opportunity and your time, Michael.

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