{"id":37487,"date":"2018-09-08T08:08:38","date_gmt":"2018-09-08T13:08:38","guid":{"rendered":"http:\/\/olduvai.ca\/?p=37487"},"modified":"2018-09-08T08:08:38","modified_gmt":"2018-09-08T13:08:38","slug":"the-end-of-cheap-debt-the-fall-rise-of-interest-rates","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=37487","title":{"rendered":"The End Of Cheap Debt: The Fall & Rise Of Interest Rates"},"content":{"rendered":"
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Creativa Images\/Shutterstock<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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The End Of Cheap Debt: The Fall & Rise Of Interest Rates<\/a><\/h3>\n
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Perhaps the greatest single trend impacting the next decade<\/strong><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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Total debt (public + private) in America is currently at a staggering $67 trillion.<\/p>\n

That number has been rising fast over the past 47 years, following the US dollar’s transformation into a fully-fiat currency in August of 1971.<\/p>\n

Perhaps this wouldn’t be such a big concern were America’s income, measured by GDP, growing at a similar rate. But it’s not.<\/p>\n

Growth in debt has far outpaced GDP, as evidenced by this chart:<\/p>\n

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In 1971, the US debt-to-GDP ratio was 1.48x. That’s roughly the same multiple it had averaged over the prior century.<\/p>\n

But today? That ratio has spiked to to 3.47x, more than doubling over just 4 decades.<\/p>\n

There are many troubling conclusions to draw from this, but here’s a simple way to look at it: It’s taking more and more debt to eke out a unit of GDP growth. <\/em><\/p>\n

Put in other words: the US economic engine is seizing up, requiring increasingly more effort to function.<\/p>\n

At some point — quite possibly some point soon — the economy will no longer be able to grow because all of its output must be used to service the ballooning debt load rather than future investment.<\/p>\n

Accelerating this point of reckoning are two major recent trends: rising interest rates and the end of global QE.<\/p>\n

Why? Because much of the recent explosion in debt has been fueled by central bank policy:<\/p>\n

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  • Interest rates have been on a steady decline since the 1980s, making debt increasingly cheaper to issue and to service.<\/li>\n
  • Since 2008, central banks have been voracious buyers of debt. Countries\/companies have been able to borrow $trillions, enabled (both directly and indirectly) by these “buyers of last resort”.<\/li>\n<\/ul>\n

    But both of those trends are ending, fast.<\/p>\n

    \u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    Creativa Images\/Shutterstock The End Of Cheap Debt: The Fall & Rise Of Interest Rates Perhaps the greatest single trend impacting the next decade Total debt (public + private) in America is currently at a staggering $67 trillion. That number has been rising fast over the past 47 years, following the US dollar’s transformation into a […]<\/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":[9860,124,9417,2120,195,305,431,449,2218,662],"class_list":["post-37487","post","type-post","status-publish","format-standard","hentry","category-economics","tag-adam-taggart","tag-central-banks","tag-cheap-debt","tag-david-stockman","tag-debt","tag-federal-reserve","tag-interest-rates","tag-james-howard-kunstler","tag-peak-prosperity","tag-quantitative-easing"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37487","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=37487"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37487\/revisions"}],"predecessor-version":[{"id":37488,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37487\/revisions\/37488"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=37487"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=37487"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=37487"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}