Hey fellow ET'ers. Something pop up in my mind today. I would like to see someone here showcasing your awesome understanding of economics. So Australia has a target cash rate of 4.5%, set by the Reserve Bank of Australia. That translates to a business lending rate of about 8%. When Australian companies as a collective borrows at 8%, in order to be able to repay the loan, it must produce return on capital investment of at least 8% to service the loan. But Australia only has a GDP growth rate of 1%. How can it produce so little yet able to service a loan repayment so big? [Update 1] Pardon my lack of research before asking this. I was just thinking out loud. I just found this article about Australia's unsustainable debt. http://cpd.org.au/2007/09/unsustainable-debt-australia’s-own-subprime-crisis/ It's a bit dated. Everyone feel free to chime in with any additional info.