A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link. New York CNN – The world is in debt. A record amount of debt. Three hundred trillion dollars, to be exact. That’s the total amount that governments, households and corporations around the world owed in June 2022, as estimated by the Institute of International Finance. That number is about 349% of global gross domestic product, and the equivalent of $37,500 of debt for every single person in the world. The world’s leverage is much higher than it was before the global financial crisis; the government debt-to-GDP ratio shot up to reach 102% by 2022. Why it matters: The demand for debt — to help consumers with inflation, rebuild infrastructure and address climate change — keeps on increasing, wrote Terry Chan and Alexandra Dimitrijevic with S&P Global Ratings in a report on Friday. “Rising interest rates and slowing economies are making the debt burden heavier,” they write. Fed funds and European Central Bank rates were up an average of 3 percentage points in 2022. That could mean $3 trillion more in interest expenses. At the same time, Chan and Dimitrijevic note, debt has become less productive since 2007. That means the value that each additional dollar borrowed adds to the economy has decreased. What it means: Higher interest rates are already hurting governments and corporations with low-credit ratings. Low-income households are also struggling with the rising cost of credit card, mortgage and auto debt. If debt accumulation continues and central banks continue their rate hikes, that burden, and fears of a recession, will also grow. When the yield on government debt increases, borrowing also becomes more expensive for corporations. Companies in the US feel the trickle-down effect of increased interest rates and may have to raise prices or reduce their spending on growth and expansion to keep it up. Rising interest rates also impact stock prices — the Federal Reserve’s hikes in 2022 contributed to a nearly 20% decline in the S&P 500. What comes next: There is no easy way out of a global debt crisis, write Chan and Dimitrijevic. Avoiding a crisis will require unpopular actions and a “great reset” of policymaker’s mind. That may mean more cautious lending, curbing overconsumption and restructuring projects or entities that don’t make a profit. About that debt limit: Hitting the debt ceiling is a big worry in Washington. The possibility of reaching the self-imposed cap on how much money the US government can borrow currently looms large. Secretary Janet Yellen warned the US Treasury that the US could hit it as early as Thursday. Congress can avoid the partial government shutdowns, potential cash flow shortfalls and even the possibility of default by simply raising the ceiling as it has in the past. But House Republicans have said they will not support increasing the borrowing limit this time around unless Democrats agree to spending cuts and other concessions. In her letter to Congress this weekend, Yellen warned that without action, the US could default on its debt by June. “Failure to meet the government’s obligations would cause irreparable harm to the US economy, the livelihoods of all Americans, and global financial stability,” she wrote. “Indeed, in the past, even threats that the US government might fail to meet its obligations have caused real harm, including the only credit rating downgrade in the history of our nation in 2011.” Moody’s Analytics sees a failure to raise the debt limit as “cataclysmic.” Researchers believe the effects would be a GDP decline of almost four percentage points, six million lost jobs and stock prices plunging by a third. It’s been a long, cold winter for bitcoin, but the thaw may be coming. After taking a beating for much of 2022, bitcoin and other cryptocurrencies are rallying in 2023, reports my colleague Allison Morrow. Bitcoin, the world’s most popular crypto, is up more than 26% over the past month, hovering above $20,000 for the first time since November, when the implosion of Sam Bankman-Fried’s trading platform FTX sent shock waves through the industry. Ethereum, the No. 2 crypto, is up more than 30% over the past month, trading above $1,500 on Monday. “Wall Street is very confident that the end of the Fed’s tightening cycle is upon us and that is providing some underlying support for crypto,” wrote Ed Moya, a senior market analyst at Oanda, on Friday. “Unless we hear some strong hawkish pushback from the Fed or if commodity prices surge, crypto traders should not be surprised if Bitcoin is able to extend its recent gains.” Bitcoin peaked more than a year ago, in November 2021, just shy of $69,000. Two months ago, as FTX contagion gripped the digital asset market, bitcoin plummeted to a two-year low of $15,480. China’s economy expanded by just 3% in 2022, far below the government’s own target, marking one of the worst performances in nearly half a century, reports my colleague Laura He. The country’s growth was heavily impacted by months of widespread Covid lockdowns and a historic downturn in the property market. “China’s domestic economy has suffered unexpected shocks in 2022, including frequent Covid outbreaks and extreme heatwaves,” Kang Yi, director of the NBS, told a press conference in Beijing. “The triple pressures of demand contraction, supply shocks, and weakening expectations continue to evolve, and the complexity, severity, and uncertainty of the environment are increasing.” China had taken a zero-tolerance approach to the coronavirus since the pandemic began. But three years of restrictions have wreaked havoc on the economy, sparked public anger and placed extraordinary pressure on local governments’ finances. Amid growing pressure, the government abruptly changed course in early December, effectively ending its controversial zero-Covid policy. However, while the easing of restrictions was a relief for many, its abruptness caught the public off guard, leaving people largely to fend for themselves. The rapid spread of infection drove many people indoors and empty shops and restaurants. Factories and companies have also been forced to shut down or cut production because more workers got sick.