{"id":50200,"date":"2019-12-18T11:02:21","date_gmt":"2019-12-18T16:02:21","guid":{"rendered":"https:\/\/olduvai.ca\/?p=50200"},"modified":"2019-12-18T11:02:27","modified_gmt":"2019-12-18T16:02:27","slug":"rickards-world-on-knife-edge-of-debt-crisis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=50200","title":{"rendered":"Rickards: World on Knife Edge of Debt Crisis"},"content":{"rendered":"\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/dweaay7e22a7h.cloudfront.net\/wp-content_3\/uploads\/2019\/12\/Rickards-World-on-Knife-Edge-of-Debt-Crisis-650x360.jpg\" alt=\"Rickards: World on Knife Edge of Debt Crisis\"\/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/dailyreckoning.com\/rickards-world-on-knife-edge-of-debt-crisis\/\">Rickards: World on Knife Edge of Debt Crisis<\/a><\/h3>\n\n\n\n<p>Herbert Stein, a prominent economist and adviser to presidents Richard Nixon and Gerald Ford, once remarked, \u201cIf something cannot go on forever, it will stop.\u201d<\/p>\n\n\n\n<p>The fact that his remark is obvious makes it no less profound. Simple denial or wishful thinking tends to dominate economic debate.<\/p>\n\n\n\n<p>Stein\u2019s remark is like a bucket of ice water in the face of those denying the reality of nonsustainability. Stein was testifying about international trade deficits when he made his statement, but it applies broadly.<\/p>\n\n\n\n<p>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.<\/p>\n\n\n\n<p>But neither of those conditions applies today.<\/p>\n\n\n\n<p>Debt is being incurred just to keep pace with existing requirements in the form of benefits, interest and discretionary spending.<\/p>\n\n\n\n<p>It\u2019s not being used for projects with long-term positive returns such as interstate highways, bridges and tunnels; 5G telecommunications; and improved educational outcomes (meaning improved student performance, not teacher pensions).<\/p>\n\n\n\n<p>And developed economies are piling on debt faster than they are growing, so debt-to-GDP ratios are moving to levels where more debt stunts growth rather than helps.<\/p>\n\n\n\n<p>It\u2019s a catastrophic global debt crisis (worse than 2008) waiting to happen. What will trigger the crisis?<\/p>\n\n\n\n<p>In a word \u2014 rates. Low interest rates facilitate unsustainable debt levels, at least in the short run. But with so much debt on the books, even modest rate increases will cause debt levels and deficits to explode as new borrowing is sought just to cover interest payments.<\/p>\n\n\n\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Rickards: World on Knife Edge of Debt Crisis Herbert Stein, a prominent economist and adviser to presidents Richard Nixon and Gerald Ford, once remarked, \u201cIf something cannot go on forever, it will stop.\u201d The fact that his remark is obvious makes it no less profound. Simple denial or wishful thinking tends to dominate economic debate. [&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":[11023,195,431],"class_list":["post-50200","post","type-post","status-publish","format-standard","hentry","category-economics","tag-daily-reckoning","tag-debt","tag-interest-rates"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50200","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=50200"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50200\/revisions"}],"predecessor-version":[{"id":50201,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50200\/revisions\/50201"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=50200"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=50200"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=50200"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}