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February 23, 2015

Global Debt Grown by $57 tr Since 2007: Government Borrowing = Debtors Prison for Consumers

By Anthony B. Sanders via David Stockman's Contra Corner

Now that the Greece default crisis is on temporary hold (they will be back again), it is time to turn our focus to the GLOBAL debt market.

Since the subprime mortgage crisis and Lehman failure, global debt has grown by $57 trillion since 2007, raising the ratio of debt to GDP by 17 percentage points.


Here is a nice chart from McKinsey &  Company that shows the relative rise of PUBLIC SECTOR debt relative to HOUSEHOLD debt. That is, governments borrowing money on YOUR BEHALF that you are now liable.

debt crisis resolved

Couple this chart with the fact that Central Banks are monetizing 100 percent of sovereign debt.

Government Debt Net Issuance 2015
Purchasing Power of the US Dollar has fallen from $1,000 in 1914 to $42.60 today. The Federal Reserve System was created on December 23, 1913.


We now in a modern day debtors’ prison system, except that government is borrowing money for which households are responsible.

But don’t worry. Paul Krugman says we owe the money to ourselves. Just don’t tell OPEC, China, Japan and Belgium what Krugman said. Now ain’t that a kick in the head!

A Virginia Debtors’ Prison.


Courtesy Anthony B. Sanders at Confounded Interest via David Stockman's Contra Corner.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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