Finance

The Tide Of Global Debt Has Peaked: What May Happen Next

By Kurt Osterberg · On April 22, 2018

The results of the central bankers’ great experiment with money printing are now in, and they are fairly depressing, as the charts above confirm:

On the left are the IMF’s annual forecasts from 2010 – 2018 (dotted lines) and the actual result (black)

Until recently, the Fund was convinced the world would soon see 5% GDP growth, or at least 4% growth

The actual outcome has been a steady decline until 2017 and this month’s forecast sees slowing growth by 2020

As the IMF headlined last week, “current favorable growth rates will not last”.

On the right, is the amount of money the bankers have spent on money printing to achieve this result

China, the US, Japan, the Eurozone and the Bank of England printed over $30tn between 2009-2017

So far, only China – which did 2/3rds of the printing, has admitted its mistake, and changed the policy

The chart above shows what happens if you spend a lot of money without getting much return in terms of growth. Again from the IMF, it shows that total global debt has risen to $164 trillion. This is more than twice the size of global GDP – 225%, to be exact, based on latest 2016 data. The IMF analysis also highlights the result of the money printing:

“Debt-to-GDP ratios in advanced economies are at levels not seen since World War II….In the last ten years, emerging market economies have been responsible for most of the increase. China alone contributed 43% to the increase in global debt since 2007. In contrast, the contribution from low income developing countries is barely noticeable.”

It doesn’t take It doesn’t take a rocket scientist to work out the result of this failed policy, which is shown in the the IMF: