We’re In Deep – IOTW Report

We’re In Deep

Cartoon businessman shoulder debt box

At  $152 trillion worldwide, we are all way over our heads in hock.  This according to the IMF.  That’s 225 percent of GDP, two-thirds is held by households and businesses, the rest by governments.

Because of these record levels of debt, experts can’t predict the effect on economic stability.  But one thing is certain, it makes the global financial system that much more unstable to even the smallest of economic change.  Like a house of cards the whole thing could come crashing down with one group of borrowers defaulting and causing a decline in economic activity.   Anyone who owes money or has invested in lenders is susceptible to financial currents worldwide.

The extreme leveraging starts with government’s applying the age old Keynesian economic excuse of spending more than it takes in while pushing off repayment into the future while stimulating consumption now.  We’ve got to break this habit before it all collapses into so many worthless promises.

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7 Comments on We’re In Deep

  1. Two-thirds of that $152 trillion is held by households and nonfinancial firms. The rest resides on government balance sheets.

    Help me somebody.

    Where does or what is the debt of “financial firms” in this number?

  2. Still, there remains significant tension between these goals. One policy that could (theoretically) resolve that tension is money-financed fiscal expansion — which is to say, just printing new money and either investing it in stimulus projects or putting it straight into consumers’ bank accounts.

    Translation: Buy more ammo gold and food because Washington is getting rid of the fed as a middle man between the treasury and the budget.

  3. Many years ago, my college pushed Keynesian economics. Even then, I thought the theory unworkable because it depended upon the good judgment of politicians acting for the common good.

    Money financed fiscal expansion suffers from the same fatal flaw – it absolutely depends on the good judgment of politicians acting for the common good. To those that say this will happen, I just say: Hillary Clinton, Harry Reid. Nuff’ said.

  4. >> Keynesian economic excuse

    No. It’s not an excuse, it’s the foundation. Fiat currency doesn’t ever get created without debt.

    In our country the federal reserve writes checks to the treasury without any backing. The same as you writing a check with zero balance. There’s no wealth, the entire system runs off confidence. Confidence exists only because the majority don’t understand how currency is created. Hell, bruthas be shooting bruthas over pieces of paper.

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