Global Debt Passes $100 Trillion, Soars By More Than $30 Trillion Since 2007by Jeff Berwick
The Dollar Vigilante
Mar. 11, 2014
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Don't let those daily US stock market highs confuse you - it is just a sign of a century old counterfeiting scheme getting out of control. As Bloomberg writes, the post-crisis years have seen "governments binge" on debt. But where is this money coming from?
Since the onset of the global financial crisis, the amount of debt globally has soared nearly 50 percent to $100 trillion. Governments have chosen to borrow in order to prop up failed financial institutions and "pull their economies out of recession," according to Bloomberg. The debt total was helped along by companies taking advantage of record low interest rates, according to the Bank for International Settlements (BIS), and giving the world products like the unprofitable Chevy Volt and Coke Zero all on the taxpayers dime.
From mid-2007 to mid-2013, the $30 trillion in extra debt compares with a $3.86 trillion decline in the value of equities to $53.8 trillion during the same period. The debt increase calculated by the Bank for International Settlements, in its quarterly review, is almost twice the size of the US's gross domestic product.
Borrowing has increased because central banks have suppressed interest rates in order to "spur growth" in the wake of the US subprime mortgage market collapse and Lehman Brothers Holding Inc's bankruptcy. These events sent the world spiraling into the worst financial crisis since the Great Depression. Yields on all bonds, from government to corporate to mortgage, average 2 percent, down from 4.8 percent in 2007, according to Bank of America Merrill Lynch Global Broad Market Index.
We've bore witness to an incredible expansion in government spending in recent years, and governments (central, state and local) have been issuing most of the debt. In the past, more debt was issued by companies. But the amount of debt placed by financials in the international market has grown by merely 19% since mid-2007, and the outstanding amounts in domestic markets have even edged down by 5% since the end of 2007. During this same period, China's credit expansion has not been nearly that of the wests, specifically the US. Their bank asset increase has far outpaced the US's:
Austerity Measures For The Few
US government debt still outstanding has soared to a record $12 trillion, up from $4.5 trillion at the end of 2007, according to US Treasury Data. Knowing that the debt loads are not selling points, governments have resorted to austerity measures and reduced spending and increased taxes. Nations which have yet to do this have said that the option is on the table. This amounts to the middle class paying for the uber-rich and the poor.
Late last year, the International Monetary Fund noted that the so-called primary deficit in the Group of Seven countries reached an average 5.1 percent in 2010. The measure is expected to fall to 1.2 percent in 2014, according to the IMF.
All of this debt will be be either defaulted on or paid via hyper-money printing. Both will result in an economic catastrophe. About 1/2 of all US citizens are receiving all or part of their living from the government at taxpayers expense. This won't change until the entire scheme collapses.
Within the Keynesian school, the massive debt expansion we have seen should have led to an unprecedented economic boom. This has not been the case. Perhaps Keynesianism is voodoo economics, without a basis in reality.
The world governments have run over the edge of the cliff, and now are merely treading air, awaiting gravity's certain justice. Government corruption and incompetence will overshadow any attemps governments and central banks make to fix the crisis. Austerity will benefit the rich and the poor and no real investments will be made into infrastructure, viable social programs and so on (you know, the greater good). The end of debt is a dream, and it is now a mainstay of our economic world. In fact, it's issuance is only hastening, and will continue to hasten as debtors become more enslaved by debt-addiction. The world is doing exactly what it did to start the financial crisis in the first place: issue record amounts of unpayable debt. This will continue - there's little public debate whatsoever of it ending in a meaningful way. Forget what ZeroHedge terms the "taper tantrums." Those will give way to more quantitative easing. Government statistics are already pondering this future economic reality:
What did that $30 trillion in debt get the world? Nothing. It was supposed to get a recovery from the worst depression since the Great Depression, but we are still seeing record high levels of unemployment in many regions of the world, including Europe and the United States. Programs like Obamacare have been disasters, as have wars in Libya, campaigns in Syria and coups in Ukraine and elsewhere.
It's quite possible that debt will come due after many of us are long gone. That might a good thing, too. That is if you don't have kids or grandkids who will be the ones getting their property seized in order to prevent the inevitable. How can you hedge yourself against The End Of The Monetary System As We Know It (TEOTMSAWKI)? That's simple - stay on your toes and know the direction of the wind. We can help you with this. In The Dollar Vigilante's paid subscription, available here, we cover all the latest economic trends, with analysis on gold, silver, foreign markets, bitcoin, real estate, legal trends and even the global hemp and marijuana industries.
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Anarcho-Capitalist. Libertarian. Freedom fighter against mankind’s two biggest enemies, the State and the Central Banks. Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Passports and host of the popular video podcast, Anarchast. Jeff is a prominent speaker at many of the world’s freedom, investment and gold conferences as well as regularly in the media including CNBC, CNN and Fox Business.