It may not be the problem but it is a good stating point. The degree of indebtedness is important.
> Inflation is low despite huge QE programs.
My understanding is that inflation is measured as a consumer-goods-only effect and that the QE programs gave vast sums of money to people who used it to buy assets (kind of a tautology that, because obviously it didn't end up flowing into consumer goods).
The fact that it didn't show up in the inflation statistics is a good start, but why is that the only way it can cause problems? It looks like the government picking winners and losers, and governments have a terrible track record of making those decisions.
I think what you mean is the ability to service the debt under a variety of non "act of god" scenarios.
There are a lot of companies around the world defaulting on USD denominated debt now because of rising interest rates, that at ZLB, would have been able to keep racking up the debt because it would have still been serviceable.
Same is true for a lot of governments with a decent amount of USD denominated debt that are finding it hard to service because of currency outflows from domestic financial (debt/stock) markets in response to rising interest rates (combined with a lack of sufficiently acceptable local options).
>It looks like the government picking winners and losers, and governments have a terrible track record of making those decisions.
It definitely seems like this to me, and is more pronounced/easier to see in places where the state has a heavier influence on the markets. But even this will only last so long before it doesn't.
Nor is the balance sheet of central banks. Inflation is low despite huge QE programs.
The problem is that there is no countercyclical program to save for the eventual downturn. (Important note, there never really was. Centuries ago villages disappeared, cities emptied out, thousands died from starvation, crime was worse, and armed conflict coming to town was very much always a possibility). Sure there are social support systems in many countires. The US has a very inefficient one, it doesn't really help getting out of the gutter.