Global Debt$250 Trillion and Rising

Please note that Global debt surged to a record $250 trillion in the first half of 2019, led by the US and China.

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What about Global GDP?

Global GDP

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Global GDP Numbers from the World Bank.

To get a $1 rise in GDP it takes about a $3 rise in debt.

Things keep pointing back to 1971.

I have written about the importance of 1971 many times, most recently in Nixon Shock, the Reserve Currency Curse, and a Pending Dollar Crisis

Dollar Crisis

A reader asked the other day what I meant by "dollar crisis".

What I meant to say was "currency crisis" and the above title is now changed.

Since the dollar is still rising (thanks to European, Japanese, and Chinese tactics), It may take even bigger US deficits before something major breaks.

On that score, both political parties in the US are poised to deliver increasing deficits as far as the eye can see.

Meanwhile, negative interest rates are destroying the European banks. For discussion of this important issue, please see In Search of the Effective Lower Bound.

US Picture

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Currency Crisis Awaits


$250 Trillion in debt. How will that be paid back?

I expect an uncontrolled collapse of a major currency, debt market, or bank system that cannot be funded. It is hard to say where it starts but I doubt it starts in the US.

Chinese and European banks are in far worse shape than US banks. European banks are getting hammered by negative rates.

Japan still struggles with decades of Abenomics.

The Fed and Central Banks brought this on by refusing to let zombie banks and corporations go under and insisting on cramming more debt into a global financial system choking on debt.

But this all has its roots in 1971. Central banks are the enablers, but Nixon Shock set things off.

A currency crisis awaits but the timing and conditions of the crisis are not knowable. It can start anywhere but I suspect the EU, Japan, or China as opposed to the US.

Ponder even paying the interest on $250 trillion, let alone the principal. What interest rate will it take?

Meanwhile, please reflect on gold.

Gold is Not a Function of the US Dollar Nor is Gold an Inflation Hedge

In the link below I post charts that make a mockery of the claim gold is some sort of inflation hedge or tied to movements in the US dollar.

But if Gold is Not a Function of the US Dollar Nor is Gold an Inflation Hedge, what is it?

Here's the answer.

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If you think central banks have everything under control, gold is not where you want to be.

If you think otherwise, gold is where you want to be.

Do central banks have everything under control?


My friend Pater Tenebrarum at the Acting Man Blog just pinged me with this pertinent thought: "The answer is of course: It won't be paid back. And since every debt is someone else's asset, you can imagine what that ultimately means. A great many people are a lot less wealthy than they think. It is all phantom wealth that can disappear in an eyeblink."

Mike "Mish" Shedlock

Global Pension Gap Expected to Hit $400 Trillion: US Leads the Way

The global pension gap of 8 nations is $70 trillion. The US alone is $38 trillion. By 2050 the total gap will hit $400T.

United Nations of Debt: Visualizing $63 Trillion in Global Debt by Country

Jeff Desjardins, the Visual Capitalist posted a nice chart of global debt on his website on Friday. I added lines in blue to group the Eurozone countries for comparison purposes. Poland is not on the Euro, but rather the Zloty. Clean boundaries were visually difficult in a single shape.

Negative-Yielding Debt Tops $17 Trillion - Bubble Keeps Expanding

On August 29, negative-yielding debt topped the $17 trillion mark. Nearly all of that is outside the US.

Negative Yield Debt Hits Record $15 Trillion, Up $1 Trillion in 2 Business Days

Negative yield debt madness accelerates. A new record high breached $15 trillion on Monday.

Exploring Trump's Claim of Using Tariffs to Pay Down $21 Trillion in Debt

Trump claims he will use tariffs to pay down the national debt. Let's explore the idea with pictures.

Paying Down Christmas Debt: How Long Will It Take

Consumers splurged this Christmas. GDP will rise. Hooray. But how long will it take for consumers to pay off their debt?

How Big is That Fed Liquidity Pump? $1.5 Trillion or $5 Trillion?

The Fed announced huge liquidity measures today. But how big? Is it $1.5 trillion or much higher?

$184T in Global Debt in 2017, $247T Through Q2 2018: What Can Possibly Go Wrong?

A new IMF report compiles debt data through the end of 2017. The numbers are staggering.

Expect Global Trade Collapse; Bills That Won’t Be Paid; Deflation Coming Up?

EU Prioritizes Penalties Over Trade. As I have commented numerous times in recent weeks, I am increasingly worried about a collapse in global trade.