Sunday , 19 November 2017


The $64 Trillion Question Is: "When and How Does the Debt Death Spiral End?"

We are in the latter stages of the debt death spiral where debt and interest payments can only be made by adding more debt. This process has a sure ending. Like the flush of a toilet, the spiral goes faster and faster until it finally ends. [Let me put forth just how serious the problem is.] Words: 431

 

So says Monty Pelerin (www.economicnoise.com) in edited excerpts from his original article*.

[Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.]

Global central banks of the top 10 debtor nations will be rolling over approx. 50% of their outstanding debt between now and 2015 because large portions of debt will be maturing in just the next two and a half years. This is a staggering amount equal to 20% of the entire world’s GDP!

As the table below shows, both the U.S. and Japan will see 20% of their total outstanding debt mature just between now and the end of the year and Canada [a whopping] 26%! The other members of the top 10 are only in a slightly better position with all but the UK to see double-digit debt rollovers of their total outstanding debt between now and 2015.

The above only reflects debt maturing. This amount would be difficult enough to finance, but these nations all run deficits which must be funded as well….The U.S., for example, will need to fund new debt resulting from projected deficits almost equal to its rollovers in the next three years. The total amount of debt issuance to meet both requirements totals over $8 Trillion dollars. Other countries in the above table run annual deficits which must also be added on to their rollover requirements. Proportionately, some are bigger than what is required in the US.

Where this funding will come from is the $64 Trillion question. There is just too much debt maturing over the next couple of years for capital markets to absorb. As such, it is highly likely we will see global quantitative easing occur as central banks step in to be buyers of last resort to help suppress interest rates and keep debt servicing costs low….It is likely [the money] will be created out of thin air…exactly as it has been for much of the last four years….If so, the question is when and how does this Ponzi scheme collapse? These debts cannot be funded without massive debasement of the currency — all currencies.

Conclusion

Nothing has been done to stop this march to ruin by the political classes – and nothing will be done! When this ends will be determined not by politicians but by markets who will eventually discipline politicians and all who trusted them. “Got Gold?”

[Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.]

*http://www.economicnoise.com/2012/07/24/the-debt-death-spiral-2/

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