{"id":21538,"date":"2016-09-02T20:16:52","date_gmt":"2016-09-03T01:16:52","guid":{"rendered":"http:\/\/olduvai.ca\/?p=21538"},"modified":"2016-09-02T20:16:52","modified_gmt":"2016-09-03T01:16:52","slug":"weve-reached-the-zero-point-of-debt-creation","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=21538","title":{"rendered":"We\u2019ve Reached the \u201cZero Point\u201d of Debt Creation"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2016\/09\/01\/weve-reached-the-zero-point-of-debt-creation\/\">We\u2019ve Reached the \u201cZero Point\u201d of Debt Creation<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p><strong>Hurtling toward a massive financial crisis.<\/strong><\/p>\n<p>Forty-five years and counting:\u00a0We\u2019ve been on a debt spree since the early 1970s when we went off the gold standard, covering every possible angle. Trade deficits, government deficits, unfunded entitlements, private debt \u2013 you name it! Our total debt has grown 2.5-times GDP since 1971.<\/p>\n<p>How could economists not see this as a problem? How is this the least bit sustainable?<\/p>\n<p>It isn\u2019t. We\u2019re hurtling toward a massive financial crisis, and all we have to show for it are financial asset bubbles destined to burst. And when they do, they\u2019ll wipe out the artificial wealth they\u2019ve created for many decades\u2026 in just a few years, as they did from late 1929 into late 1932!<\/p>\n<p>The chart below shows the common-sense truth.<\/p>\n<p>As with any drug \u2013\u00a0<em>and debt\u00a0<u>is<\/u>\u00a0a financially enhancing drug\u00a0<\/em>\u2013 it takes more and more to create less and less of an effect. Eventually, you reach the \u201czero point\u201d where there is no effect and the drug kills you from its very strain and toxicity.<\/p>\n<p>We\u2019re rapidly approaching that zero point, after every dollar of debt has produced less and less GDP steadily since 1966:<\/p>\n<p><a class=\"image-anchor\" href=\"http:\/\/wolfstreet.com\/wp-content\/uploads\/2016\/09\/2016-08-31-return-on-debt.png\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-26353 size-full\" src=\"http:\/\/wolfstreet.com\/wp-content\/uploads\/2016\/09\/2016-08-31-return-on-debt.png\" sizes=\"auto, (max-width: 520px) 100vw, 520px\" srcset=\"http:\/\/wolfstreet.com\/wp-content\/uploads\/2016\/09\/2016-08-31-return-on-debt.png 520x, http:\/\/wolfstreet.com\/wp-content\/uploads\/2016\/09\/2016-08-31-return-on-debt-260x193.png 260x, http:\/\/wolfstreet.com\/wp-content\/uploads\/2016\/09\/2016-08-31-return-on-debt-160x119.png 160x\" alt=\"2016-08-31-return-on-debt\" width=\"520\" height=\"386\" \/><\/a><\/p>\n<p>Note that the anomaly in the chart after 2008 was due to the impact of unprecedented QE. Ever since that disruption, the trends have pointed back down \u2013 making a beeline toward that zero point again.<\/p>\n<p>Back in 2002, Swiss investor and market prognosticator Marc Faber published a similar chart. His findings showed the zero point for debt creation would occur around 2015. With updated data, we now see that the zero point will hit around the beginning of 2017.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>We\u2019ve Reached the \u201cZero Point\u201d of Debt Creation Hurtling toward a massive financial crisis. Forty-five years and counting:\u00a0We\u2019ve been on a debt spree since the early 1970s when we went off the gold standard, covering every possible angle. Trade deficits, government deficits, unfunded entitlements, private debt \u2013 you name it! Our total debt has grown [&hellip;]<\/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":[195,353,4726,2307,661,662,4255],"class_list":["post-21538","post","type-post","status-publish","format-standard","hentry","category-economics","tag-debt","tag-gdp","tag-harry-dent","tag-marc-faber","tag-qe","tag-quantitative-easing","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21538","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=21538"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21538\/revisions"}],"predecessor-version":[{"id":21539,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21538\/revisions\/21539"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=21538"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=21538"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=21538"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}