To grasp why the most important central banks — from the Fed to the Bank of England to the Bank of Japan —- are now leaping into action as if the world were on fire, it helps to examine the subject of corporate debt.
For years, wonks bearing spreadsheets have warned that corporations around the planet were developing a dangerous addiction to debt. Interest rates were so low that borrowing money was essentially free, enticing companies to avail themselves with abandon. Something bad was bound to happen eventually, leaving borrowers struggling to make their debt payments. Lenders would grow agitated, tightening credit for everyone. The world would confront a fresh crisis.
