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Total global debt tops 325% of GDP as government debt jumps: IIF
Topic Started: 5 Jan 2017, 09:30 AM (4,582 Views)
Terry
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b_b
5 Jan 2017, 07:09 PM
As discussed above, it is possible for GDP to grow without ever increasing debt. It can also happen if a country runs a current account surplus.

However, for practice purposes that rarely happens in a country like Australia - foreigners like to save in $A forcing us to run a CAD.

Fortunately it is possible for the nom government sector to de-gear while still growing GDP. It simply requires the government to run a deficit (see my chart on Japan earlier in this thread as an example). And for a country with its its own non convertible currency (is Australia / Japan etc) the government is never financially constrained. US households have de-geared significantly since 2008, all the while GDP grew.
Japan has grown GDP while experiencing the greatest deflationary period in modern economic history. Growing GDP means nothing to the suburbanites if it doesn't impact them personally. Nor does it prevent their assets turning to dust.
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Tommy
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b_b
5 Jan 2017, 07:09 PM
As discussed above, it is possible for GDP to grow without ever increasing debt. It can also happen if a country runs a current account surplus.

However, for practice purposes that rarely happens in a country like Australia - foreigners like to save in $A forcing us to run a CAD.

Fortunately it is possible for the nom government sector to de-gear while still growing GDP. It simply requires the government to run a deficit (see my chart on Japan earlier in this thread as an example). And for a country with its its own non convertible currency (is Australia / Japan etc) the government is never financially constrained. US households have de-geared significantly since 2008, all the while GDP grew.

The debt is real. So are the deposits on the other side. Yet no one ever seem to post that deposit to GDP ratio is at an all time high. I wonder why?
Of course you can form many more arguments when you are talking about certain government, countries and sectors .your gain will be to the detriment of someone or somewhere else (America and China for example) but as far as global growth ? It's impossible to grow gdp without creating more money and therfore more debt . I know that things might seem more complicated and that's just how they like it. 08 was a perfect example of the magic at work,simple home loans took on names and complexity that were unrecognizable an eventually took down some of the largest financial institutions of our time. For all the complex terminologies it turns out it was just standard home loans that could never be repayed.
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b_b
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Tommy
5 Jan 2017, 07:57 PM
Of course you can form many more arguments when you are talking about certain government, countries and sectors .your gain will be to the detriment of someone or somewhere else (America and China for example) but as far as global growth ? It's impossible to grow gdp without creating more money and therfore more debt . I know that things might seem more complicated and that's just how they like it. 08 was a perfect example of the magic at work,simple home loans took on names and complexity that were unrecognizable an eventually took down some of the largest financial institutions of our time. For all the complex terminologies it turns out it was just standard home loans that could never be repayed.
You seem to have made up your mind that the economy needs ever expanding debt to grow and its unsustainable. I'm afraid you are falling for a bit of a bear myth as it simply is not true. That does mean we can not have a recession or a financial crisis. It just means you are focusing on the wrong risks.
(S – I) + (T - G) + (M - X) = 0
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Terry
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b_b
5 Jan 2017, 08:16 PM
You seem to have made up your mind that the economy needs ever expanding debt to grow and its unsustainable. I'm afraid you are falling for a bit of a bear myth as it simply is not true. That does mean we can not have a recession or a financial crisis. It just means you are focusing on the wrong risks.
If debt stops expanding when your economy depends on debt-driven consumer spending and asset inflation, it usually means that the economy will be negatively impacted. I cannot prove that in the case of Australia as debt has not stopped expanding. However, what we do know is that our economic health is driven by consumer spending of which asset inflation is a key driver.
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Tommy
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b_b
5 Jan 2017, 08:16 PM
You seem to have made up your mind that the economy needs ever expanding debt to grow and its unsustainable. I'm afraid you are falling for a bit of a bear myth as it simply is not true. That does mean we can not have a recession or a financial crisis. It just means you are focusing on the wrong risks.
Myth? Economic growth can't exist without more money. Money is created in the form of debt. What am I missing? I suppose the world could make every increasing amounts of money without creating more?????? Or maybe money will create itself and I will find it in the fetal position in my wallet?
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Ex BP Golly
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Print baby print!
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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Trollie
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Terry
5 Jan 2017, 07:22 PM
means nothing to the suburbanites if it doesn't impact them personally.
Nothing means anything to anyone if it doesn't impact them personally.

Thanks for yet again tackling a non issue.
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Terry
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Tommy
5 Jan 2017, 08:42 PM
Myth? Economic growth can't exist without more money. Money is created in the form of debt. What am I missing? I suppose the world could make every increasing amounts of money without creating more?????? Or maybe money will create itself and I will find it in the fetal position in my wallet?
You can argue that in the case of Japan, economic growth has been stunted because of the suburbanites' reluctance to take on debt.
Trollie
5 Jan 2017, 08:54 PM
Nothing means anything to anyone if it doesn't impact them personally.

Thanks for yet again tackling a non issue.
Will fill in the gaps for you Roddy.

Growing GDP means nothing to the suburbanites if it doesn't impact them personally. Nor does it prevent their assets turning to dust.
Edited by Terry, 5 Jan 2017, 08:56 PM.
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Tommy
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Ex BP Golly
5 Jan 2017, 08:44 PM
Print baby print!
Did you check your wallet hahaha. I'm still trying to determine the correct room temperature for my new cash to hatch. Once it does then I'm off to the shops to do my bit for the economy!
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b_b
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Tommy
5 Jan 2017, 08:42 PM
Myth? Economic growth can't exist without more money. Money is created in the form of debt. What am I missing? I suppose the world could make every increasing amounts of money without creating more?????? Or maybe money will create itself and I will find it in the fetal position in my wallet?
I have addressed all of your points. This is obviously a p|ss take.

See ya :bye:
(S – I) + (T - G) + (M - X) = 0
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