There’s an interesting article (mostly tables) at zerohedge on debt to GDP ratios by country. Here’s the conclusion:
We have written on this topic on countless occasions in the past, so we will be brief: either the Fed inflates this debt away, or one can kiss any hope of economic growth goodbye, even if that means even more central bank rate cuts, more QEs everywhere, and stock markets trading at +? while the middle class around the globe disappears and only the 0.001% is left standing.
The only two observations I can contribute are that a) the major economies aren’t buying a lot of economic growth with all that debt and b) in this regard our trajectory isn’t as bad as some other countries, e.g. China.
in this regard our trajectory isn’t as bad as some other countries
Woohoo, we suck the least!
Always look at the bright side.
Check out the graph and discussion after the “loans over deposits” introduction.
http://www.zerohedge.com/news/2015-02-24/nirp-officially-arrives-us-jpm-starts-charging-fees-deposits
Also, there has been a spate of fed region reports recently highlighting economic weakness, and the housing note by CS just today. Pile on a subprime fueled auto market and it doesn’t smell robust. It was a great two month recovery.
I know that most here disagree, but businessmen have pulled in their horns for a good 6 years running. They are deciding “to not build that.” The consumer is hand to mouth. Despite Marvin Haggler-like victory dances this economy is nowhere.
For those of you playing at home NIRP stands for “Negative Interest Rate Policy”. There’s just too much cash. The traditional solution for that problem is taxation.
Also, history doesn’t repeat itself but it does rhyme. Look up “capital strike of 1938”.
Spurred by Janet Yellen’s most recent remarks, I’ve been thinking about a post to be titled “The New Normal”. Apparently, the new normal includes zero (or negative) interest rates, lower labor force participation masking high unemployment, and low to no real GDP growth.
From the linked article:
It seems like he is contending, as I do, that the money supply and the credit supply are essentially the same.
The guys at zerohedge are more gold bugs than I’m entirely comfortable with.
I saw that one of the big banks is going to start charging for deposits now.
The traditional solution for that problem is taxation.
What are the odds that the people holding all the new cash actually get taxed, as opposed to the middle- & working-classes?
Yes, one should always let Monty Python guide one in these situations. Personally the Galaxy Song is never far from mind.
Well, yes, there is bugger all down here on earth.