This is what passes for policy today

World needs $100 trillion more credit, says World Economic Forum

The global credit stock has already doubled in recent years, from $57 trillion to $109 trillion between 2000 and 2009

Considering this is the meeting of the presumably leading lights of the world, our fate is sealed.

Even if you take the first caption that appears under the photograph at face value, any person that has ever had to run an activity or even just run a home budget can tell you that of two things, one must be true: either these guys are incompetent idiots or they are pathological criminals.

First off; the Bank of International Settlements estimates the global outstanding credit market at upwards of US$650Trillion. This is compared to a world economy that was at one point worth US$50Trillion. Right there, anyone with basic arithmetic abilities could marvel at how we might have been able to get this far without suffering a devastating crisis.

But BIS estimates not withstanding let’s take the caption at face value.

In nine years from 2000 till 2009, credit markets have doubled in value. Fine. What about our economies?

If we take the USA as our benchmark (the US economy not only makes up 70% or world economy but US banks are also the originators and holders of the largest chunk by far of all credit instruments globally), this is what it looks like:

FRED Graph
So, from 2000 till 2009 US GDP progressed from about 10T to about 14T… let’s say a round $15Trillion US dollars.
If you read previous posts on this blog, you will also know that since 1980 Federal debt has increased by well over 1000% whereas GDP barely doubled in size.
Now, not content with this dismal performance of always taking out more debt to stimulate an economy that for all intents and purposes has been overstimulated since 1980 our “leaders” are planning to throw another $100Trillion into this black hole that is now a confirmed and very well defined financial crisis due to insolvency.
This is what passes for “policy” nowadays.

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2 Responses to “This is what passes for policy today”

  1. Pat Donnelly Says:

    As I posted elsewhere, money is a claim on some asset. The claims manufactured now way out number the possible assets!

    Time to cash out and make useful purchases? Sell all investments while they still have value? Even the house? Renting makes sense as rents fall faster than house prices? None of this makes sense if you follow the gurus who were educated that gentle inflation always works and will always pertain? Their plans to reinflate are doomed and once they realize it there will be a stampede to the door!

  2. Pat Donnelly Says:

    Good post! I noted this astonishing snippet also. The implications are profound.

    I regret that the Irish were happy to enslave themselves so quickly after all the lives lost in the struggle for “sovereignty”.

    Given the love of the masses for bread and circuses, how are the one eyed to proceed? The mob simply are not interested. It is enough to tempt one to join in the looting?!

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