Most western countries have a problem. Our lifestyles motivated us to take on debt that we can't possibly repay - for mortgages, cars and lifestyle - unless we change to a frugal way of life. When societies overestimate themselves and/or lose their competitive edge (e.g. an aging population or a currency union with a currency that is too strong for a country and diminishes its exports), their debt-to-GDP rises to dangerous heights. Japan (currently 214% debt-to-GDP ratio) is estimated to be bankrupt in the 2040s if they don't find a solution (interest payments will overtake tax payments by then if tax revenues remain on the current level). This is the future of all western societies that don't fight their debts.
Besides that, food instability will rise, ecosystems are getting destroyed and the human population will still continue to grow with the demand of rising living standards. So the underlying reality we operate in is not getting better and it's estimated that we will lose over 3% ($8 trillion) of World's GDP to Climate Change by 2050 which will keep the poor countries in even worse conditions.
It's a house of cards that will collapse under its own weight, unless people understand that all their wealth is based on debt - economically and ecologically. And the debt will be inherited by future generations that can't defend themselves yet.
I think we need to focus our economies on two main objectives:
- Reduce debt: Every country needs to have debt - it's important for the growth of our ecomomies. But it's also important that the debt is on a level that can be repaid. Otherwise an economic stagnation is very likely which harms everyone. Every ounce of debt has to be used for innovation and education, not for lifestyle creep. We need room for the debt to grow in case of big crises. Even in relatively good times, the margin for further debt growth potential was reduced which is a big mistake. In bad times, we need to increase our debt to keep the economy going. We should use this debt primarily to fuel the innovation targeted at sustainability - not to keep companies alive that have unsustainable business models.
- Innovation: We need to find ways to sustain our civilization on this planet without destroying our ecosystems. All efforts (and investments) must be focused on the creation of technologies and consumer behaviours that increase our sustainability. All other forms of wealth will result from innovation in this space. It will revolutionize transportation, supply chains, food production, water processing, waste management and even lifestyles. We will need to reinvent ourselves.
In the 20th century, humans learned how powerful they are. In the 21st century, we now need to (re-)learn how to be humble again. Let us use our power to build a better world for future generations.
An article with a simplified overview on how to decrease debt (in the US): Solutions to national debt.