The Swiss-based BIS said total debt ratios are now significantly higher than they were at the peak of the last credit cycle in 2007, just before the onset of global financial crisis.
Combined public and private debt has jumped by 36 percentage points since then to 265pc of GDP in the the developed economies. This time emerging markets have been drawn into the credit spree as well. Total debt has spiked 50 points to 167pc, and even higher to 235pc in China, a pace of credit growth that has almost always preceded major financial crises in the past.
Adding to the toxic mix, off-shore borrowing in US dollars has reached a record $9.6 trillion, chiefly due to leakage effects of zero interest rates and quantitative easing (QE) in the US. This has set the stage for a worldwide dollar squeeze as the Fed reverses course and starts to drain dollar liquidity from global markets. Seguir leyendo...
The federal debt held by the public totals more than $13 trillion, or about $107,000 per household in the United States, according to a report released this month by the Cato Institute.
The report, titled “Washington’s Largest Monument: Government Debt,” suggests that growing debt, which has doubled over the past seven years, poses a burden on future taxpayers and could lead to a financial crisis.
According to Cato, financing government debt through tax collection creates distortions since much of federal spending goes to subsidy and benefit programs, which reduce work incentives and savings.