{"id":16137,"date":"2016-01-07T11:42:48","date_gmt":"2016-01-07T16:42:48","guid":{"rendered":"http:\/\/olduvai.ca\/?p=16137"},"modified":"2016-01-07T11:42:48","modified_gmt":"2016-01-07T16:42:48","slug":"2016-theme-4-the-end-game-of-debt-fueled-growth","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=16137","title":{"rendered":"2016 Theme #4: The End-Game of Debt-Fueled “Growth”"},"content":{"rendered":"

2016 Theme #4: The End-Game of Debt-Fueled “Growth”<\/a><\/h3>\n

This week I am addressing themes I see playing out in 2016.<\/i><\/p>\n

A number of systemic, structural forces are intersecting in 2016. One is the end-game of debt-fueled “growth.”<\/b><\/p>\n

We can summarize the official “solution” to the Global Financial Meltdown of 2008 in one line:<\/b>\u00a0borrow and blow trillions–of yen, yuan, dollars, euros, reals, you name it.<\/p>\n

The goal of borrowing and blowing trillions was to re-invigorate “growth”<\/b>— any kind of “growth,” no matter how wasteful, unproductive or even counter-productive it might be: wars, nation-building, ghost cities, needless MRIs, useless college diplomas, bridge to nowhere–anything the borrowed money was squandered on counts as “growth” in the Keynesian status quo.<\/p>\n

Unsurprisingly, this strategy yields\u00a0diminishing returns<\/i>\u00a0as the negative returns on all this debt-fueled spending piles up.<\/b>\u00a0While the yield on the “investment” is either negative or only fleetingly positive, the interest due on the debt is forever. That’s the source of\u00a0diminishing returns<\/i>\u00a0in a nutshell.<\/p>\n

The\u00a0diminishing returns<\/i>\u00a0on additional debt is clearly visible in these charts.<\/b><\/p>\n

Global debt has soared but this massive stimulus has yielded subpar “growth” (and the final costs of all the astounding mal-investment have yet to be totaled):<\/p>\n

\"\"<\/p>\n

Has borrowing and blowing $9 trillion solved any structural problem in the U.S. economy? No.<\/p>\n

\"\"<\/p>\n

While total credit in the U.S. has exploded, GDP (a measure of actual output) has under-performed for years. The tiny decline of credit in the 2008-09 financial meltdown almost collapsed the global economy. The strategy of borrowing and blowing trillions has backed the global economy into a corner:\u00a0expand debt or die.<\/b><\/p>\n

\"\"<\/p>\n

While U.S. bank credit has expanded by 40%, GDP has risen 21.7%–roughly half the rate of credit expansion. This is\u00a0diminishing returns<\/i>\u00a0on a vast scale.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

2016 Theme #4: The End-Game of Debt-Fueled “Growth” This week I am addressing themes I see playing out in 2016. A number of systemic, structural forces are intersecting in 2016. One is the end-game of debt-fueled “growth.” We can summarize the official “solution” to the Global Financial Meltdown of 2008 in one line:\u00a0borrow and blow […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[11540,127,195,10746,209,467,4924],"class_list":["post-16137","post","type-post","status-publish","format-standard","hentry","category-economics","tag-borrowing-money","tag-charles-hugh-smith","tag-debt","tag-debt-fueled-growth","tag-diminishing-returns","tag-keynesian-economics","tag-oftwominds"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16137","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16137"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16137\/revisions"}],"predecessor-version":[{"id":16138,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16137\/revisions\/16138"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16137"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16137"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16137"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}