Tuesday, September 10, 2019

When the Overdue Recession Hits Us


Preface
I don't have an Economics Degree, so I rely on a broad spectrum of economists and monetary theorists for these essays.  Plus, as a wise man once told me, "You don't have to be a Master Carpenter to recognize a shack.".  :)

A few facts---
1.  Worldwide debt is somewhere in the neighborhood of $250 trillion, which is close to three times the world's GDP.
2.  The U.S. public National Debt is now a tad over $22.5 trillion...more than our annual GDP.  We pay $896 million per day in Interest on that debt.  Politicians in DC are increasing our Debt exponentially.
3.  U.S. personal debt is now just shy of $20 trillion.
4.  U.S. unfunded liabilities now stand at a bit more than $125.7 trillion.
5.  U.S. nonfinancial Corporate debt is now at about $15 trillion...the highest it has been in decades.
6.  Total U.S. Debt (not counting unfunded liabilities) is now a tad over $74.1 trillion.  [See:  USdebtclock.org ]  That's more than three times our annual GDP.

Conclusions---
1.  The world is awash in Debt.
2.  The U.S.A. has a significant portion of that Debt.
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Meanwhile, the UK, continental Europe, and Japan all have been adhering to the Zimbabwe "School of Economics" by PRINTING MONEY.  Plus, the USA is on the verge of starting QE-4, more printing of money.  This is all being done to prop up the Stock Market.  In addition, Corporations have been buying back their own stock, thus falsely inflating that Market.  At the same time, Bond Markets have been crashing, capital expenditures have been decreasing, and manufacturing has been slowing down...in the Western World.  In Asia (except for Japan), they have been sticking to conventional economic, monetary, and fiscal policies; but in the West, we are in an Era of Weirdness.
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Bottom Line---
When the overdue Recession hits, and there's a succession of bursting Debt Bubbles, the impact on Western World Finance and Economies will be much greater than in 2008-2009.  Businesses, a few investment Banks, perhaps some regular Banks, Insurance companies, and associated firms likely will collapse, then unemployment will jump way up, and price inflation will take hold...thus exacerbating the Recession, possibly driving it into a full-blown Depression.

Central Banks refuse to bite the bullet and raise Interest rates (or better yet, let the Market determine the rate) because that would burst the Stock Market Bubble.  We would have a Recession, but we need to because too much money is chasing too few goods.  Big-time inflation is coming unless we dial back all this monetary craziness.
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Not only my opinion.  Be Well

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