Jim Rickards Warns that Tsunami of Debt Could Upend the Economy
At some point, an economic problem deepens so much that the piper has to be paid. Both in the U.S. and globally, one of those problems appears to be mountains of debt.
Jim Rickards recently issued a dire proclamation about the global debt situation:
Current global debt levels are simply not sustainable. Debt actually is sustainable if the debt is used for projects with positive returns and if the economy supporting the debt is growing faster than the debt itself. But neither of those conditions applies today.
In other words, most of the global debt we’re racking up isn’t being used for productive purposes. Instead it’s being used to service “benefits, interest and discretionary spending,” according to Rickards.
This debt growth should continue. According to the Institute of International Finance (IIF), global debt is expected to pass $255 trillion by the end of this year, and they don’t see the pace of debt accumulation slowing down.
In fact, you can see below how the official global debt has already skyrocketed from about $80 trillion in 1999 to this new record:
Zero Hedge reports that, by year’s end, the global debt will be “roughly equivalent to a record 330% of global GDP.”
With debt outpacing growth by such a large margin, we are fast approaching a day of reckoning. And when that day arrives, it could be disastrous.
Rickards: “It’s a Catastrophic Global Debt Crisis Waiting to Happen”
Another Zero Hedge artjcle reports:
The world bank looked at the four major episodes of debt increases that have occurred in more than 100 countries since 1970 — the Latin American debt crisis of the 1980s, the Asian financial crisis of the late 1990s and the global financial crisis from 2007 to 2009.
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