Historical US credit debt versus GDP
Posted: Sun Nov 16, 2014 10:07 amLink sourced from coinflation.com, but the original link is below.
http://www.acting-man.com/?p=34193#more-34193 includes an entertaining historical flat-earth map, and in the text makes some basic but excellent credit bubble/fiat points but it is this graph of credit debt versus GDP below that is the prime attraction:
http://www.acting-man.com/blog/media/20 ... nd-GDP.png
This graph, which in original form actually comes from the St. Louis Federal Reserve Bank, simply SCREAMS crisis ahead! When? Who knows - it is apparent by now that there is global tolerance for debt that is allowing major credit expansion/money printing to continue longer than I would ever have predicted, but even at a global level it has to end eventually. The 2008 bubble bursting (and you can see that on the chart as a blip), as bad as that was, was just a pimple on the overall credit bubble. Most people don't get it or else this would be all over the news. The rate (slope of line) of expansion of credit can NOT exceed the rate of expansion of GDP except for very short, transient, time periods. The two lines were roughly parallel for most of our history until 1971. At that point we experienced a major slope change in credit when we came off the gold standard, and in the mid 80s the credit to debt ratio exceeded 1.0 for the first time ever as we expanded to defeat the Soviet Union in the cold war (successfully!). But the credit expansion (as occurred during World War II as a national survival response) wasn't temporary - the credit line didn't restore itself toward the GDP line. Instead the slope went asymptotic in the mid-90s and that continues at an ever increasing exponential increase (except for the 2008 blip). This cannot continue forever. No unbacked fiat currency (money printing without physical backing) in the history of mankind has ever succeeded for any length of time. And the longer it goes on, the greater the fall will be.
But it might last longer than I can conceive. We have already (in the last 4 years) had moments of crisis that were averted by global cooperation. I have anticipated circa 2016 as an issue, 2020 at the outset. But it could go longer if all TPTB are in lock-step and all profiting off this. I can't predict the timing, but I do know the event. It will end when someone powerful enough stops profiting from it, and causes the music to stop when they are firmly planted in their chair, leaving everyone else to fight over the rest. That could even be 10 years, maybe even 20 years - maybe longer than I have to live. But the time to prepare is now.
Get ready...
68
http://www.acting-man.com/?p=34193#more-34193 includes an entertaining historical flat-earth map, and in the text makes some basic but excellent credit bubble/fiat points but it is this graph of credit debt versus GDP below that is the prime attraction:
http://www.acting-man.com/blog/media/20 ... nd-GDP.png
- debt and GDP.png (112.73 KiB) Viewed 465 times
This graph, which in original form actually comes from the St. Louis Federal Reserve Bank, simply SCREAMS crisis ahead! When? Who knows - it is apparent by now that there is global tolerance for debt that is allowing major credit expansion/money printing to continue longer than I would ever have predicted, but even at a global level it has to end eventually. The 2008 bubble bursting (and you can see that on the chart as a blip), as bad as that was, was just a pimple on the overall credit bubble. Most people don't get it or else this would be all over the news. The rate (slope of line) of expansion of credit can NOT exceed the rate of expansion of GDP except for very short, transient, time periods. The two lines were roughly parallel for most of our history until 1971. At that point we experienced a major slope change in credit when we came off the gold standard, and in the mid 80s the credit to debt ratio exceeded 1.0 for the first time ever as we expanded to defeat the Soviet Union in the cold war (successfully!). But the credit expansion (as occurred during World War II as a national survival response) wasn't temporary - the credit line didn't restore itself toward the GDP line. Instead the slope went asymptotic in the mid-90s and that continues at an ever increasing exponential increase (except for the 2008 blip). This cannot continue forever. No unbacked fiat currency (money printing without physical backing) in the history of mankind has ever succeeded for any length of time. And the longer it goes on, the greater the fall will be.
But it might last longer than I can conceive. We have already (in the last 4 years) had moments of crisis that were averted by global cooperation. I have anticipated circa 2016 as an issue, 2020 at the outset. But it could go longer if all TPTB are in lock-step and all profiting off this. I can't predict the timing, but I do know the event. It will end when someone powerful enough stops profiting from it, and causes the music to stop when they are firmly planted in their chair, leaving everyone else to fight over the rest. That could even be 10 years, maybe even 20 years - maybe longer than I have to live. But the time to prepare is now.
Get ready...
68