When will the Great Financial Ponzi end?

[Value Collector]

What on earth are you talking about? You are comparing apples to oranges. You need to compare total debt to total GDP and total debt growth to total GDP growth otherwise it makes no sense. You are trying to compare total GDP to the individual annual increase in debt which is a useless and nonsensical comparison.

What you are saying would be the equivalent of saying "widget corporation has $100 million dollars of earnings and its debt only increased by $15 million this year". Its kind of a meaningless analysis. What would be meanignful is saying that "widget corporation last year earned $97 million and this year earned $100 million. Meanwhile its total debt increased from $300 million to $315 million". The second sentence is a more accurate portrayal of whats going on with global debt to GDP.

You keep ignoring the two key points:

1) Global debt already far exceeds global GDP. Globally total GDP is somewhere around $95 - 110 trillion USD (depending on who's figures you use). While total debt is $300 - $350 trillion USD. And that $300 - $350 trillion figure excludes various off balance sheet liabilities (unfunded pensions, etc). You could argue if you were comparing the total economy to a company GDP would be like sales rather than profit. And any company that has debt which is 3 times sales is generally considered highly indebted. Even debt to EBITDA (let alone debt to sales) of 3 times is considered to be a considerable amount of debt for the majority of companies (although it can be okay for some companies such as utilities, real estate companies, etc).

2) In 2016 global debt was around $69 trillion USD (extrapolated from the graph I posted earlier). So its increased from $69 trillion to the current $100 trillion. That is a $31 trillion dollar increase in 8 years. In the same 8 years Total debt increased from $221 trillion to $315 trillion. That is a $94 trillion dollar increase. So the total debt in nominal dollar terms increased by triple the amount that total GDP did. And it also increased at a faster percentage rate as total debt to GDP increased from 320% to 333% (some other figures from other sources show even higher increases in the total debt to GDP ratio).

So to summarize debt is increasing faster than GDP in both dollar terms and percentage terms. And this has been going on since the 1970s (when the final link to gold was severed and the world moved to a pure fiat standard). If debt kept gorwing faster than earnings for a company in both dollar and percentage terms over a 50 year period it would generally be considered unsustianable (depending on the starting level of the debt) and the same is ture for the world economy.

At this point I am getting tired of dealing with your ignorance, lack of using facts to argue and your lack of logic and constant arguing in bad faith. Its very tiresome.

You are missing the point that total debt is an accumulation over many years, where as GDP is an annual figure.

Comparing total GDP in say 2024 to how much debt grew in 2024 gives you the most accurate results on your claim that debt is fueling GDP.

For example if total global output this year is $140 Trillion but debt only grew by $11 Trillion this year, then obviously the vast majority of GDP is not related to that increase in debt and that proves your original claim is false.

I am not sure why can’t understand that.

I mean it’s like saying some ones life style is fuelled by credit card debt, because they had $50,000 credit debt. But if they had spent $140,000 that year, and the credit card had only increased from $45,000 to $50,000 then only $5,000 of that total $140,000 spending they did can be attributed to debt, the other $135,000 is genuinely their own output.

 

[divs4ever]

given the Global Debt situation currently , the main figure is the interest on the debt ( and can it be serviced in a timely fashion )

chances are many nations cannot service the debt without some refinancing maneuver ( such as increased borrowing , or a pause on interest payments )

and sadly some of those nations are rather large

 

[Value Hunter]

You are missing the point that total debt is an accumulation over many years, where as GDP is an annual figure.

Comparing total GDP in say 2024 to how much debt grew in 2024 gives you the most accurate results on your claim that debt is fueling GDP.

For example if total global output this year is $140 Trillion but debt only grew by $11 Trillion this year, then obviously the vast majority of GDP is not related to that increase in debt and that proves your original claim is false.

I am not sure why can’t understand that.

I mean it’s like saying some ones life style is fuelled by credit card debt, because they had $50,000 credit debt. But if they had spent $140,000 that year, and the credit card had only increased from $45,000 to $50,000 then only $5,000 of that total $140,000 spending they did can be attributed to debt, the other $135,000 is genuinely their own output.

But in your example what you are not looking at is the long term picture. If that person runs up an extra $5000 of credit card debt every year even though in any given year the deficit is small and most of their spending comes from their own earnings eventually its going to cause problems. If they continue down the same path for another 10 - 20 years eventually repaying the credit card interest (let alone the principle) will absorb a hefty portion of their annual income and they will run into serious problems. Do you think somebody can spend more than they earn into perpetuity? Is that sustainable?

Obviously the total GDP figure is not primarily fueled by debt growth but the growth of GDP is primarily fueled by debt. Without credit growth the economy would have years on end of stagnation. Just look at what happened during the global financial crises. Credit contracted by a small amount but that was enough to send the global economy into a severe recession where many companies went bankrupt and a huge number of people lost their jobs and this occurred because outstanding credit decreased by a few percent (debt deflation) instead of increasing by a few percent.

 

[Value Hunter]

given the Global Debt situation currently , the main figure is the interest on the debt ( and can it be serviced in a timely fashion )

chances are many nations cannot service the debt without some refinancing maneuver ( such as increased borrowing , or a pause on interest payments )

and sadly some of those nations are rather large

Interest rates are much higher than 3 or 4 years ago and as long term debts gradually mature and get rolled over at the new higher interest rates this will be a huge burden on borrowers. It will also cause government deficits to skyrocket in many countries.

And yes even though interest rate cuts have started on average interest rates over the next ten years will likely be higher than they were over the last ten years.