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Debt Levels Are Skyrocketing To Extremely Dangerous Levels – How Long Can This Possibly Keep Going?

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SkyrocketingNever before has the world faced such a serious debt crisis.  Yes, in the past there have certainly been nations that have gotten into trouble with debt, but we have never had a situation where virtually all of the major powers around the globe were all drowning in debt at the same time.  And what makes this crisis even more unprecedented is that everyone on the planet is using fiat currency that is backed up by nothing.  It is all just a bunch of paper and data points that people have faith in.  Right now, confidence in this system is being shaken as debt levels skyrocket to extremely dangerous levels.  Many are openly wondering how much longer this can possibly go on.

Just consider what is going on over in Europe right now.  Even the countries that have supposedly “tried austerity” continue to rack up debt at a mind blowing pace.  New numbers that have just been released show that government debt to GDP ratios for some of the most financially troubled nations in Europe are absolutely soaring

  • Euroarea: 92.2%, up from 88.2% a year ago
  • Greece: 160.5%, up from 136.5% a year ago
  • Italy: 130.3%; up from 123.8% a year ago
  • Portugal: 127.2%, up from 112.3% a year ago
  • Ireland: 125.1%, up from 106.8% a year ago
  • Spain: 88.2%, up from 73.0% a year ago
  • Netherlands: 72.0%, up from 66.7% a year ago

Meanwhile, the debt to GDP ratio in Japan is now well past the 200% mark and continues to march upward with no apparent end in sight.  The following is from a recent MSN article

In Japan, the good news is that the nation’s budget for the fiscal year, which started on April 1, will see the government raise a higher percentage of spending from tax revenue than at any other time in the past four years. The bad news is that the government will still cover 46.3% of its spending from borrowing. The Organisation for Economic Cooperation and Development estimates that Japan’s budget deficit for 2013 amounted to 10.3% of gross domestic product.

In China, the big problem is the absolutely stunning growth of private domestic debt.  According to a recent World Bank report, the total amount of credit in China has risen from 9 trillion dollars in 2008 to 23 trillion dollars today.

That increase is roughly equivalent to the entire U.S. commercial banking system.

According to financial journalist Ambrose Evans-Pritchard, the ratio of private domestic debt to GDP in China is now wildly out of control…

The 160pc debt ratio for China is based on a conservative measure of credit. Fitch says it is 200pc if you count all offshore vehicles, trusts, letters of credit etc.

This morning China Securities Journal – an arm of the regulators – said it may really be 221pc.

Well, what about the United States?

As I noted the other day, our ratio of federal government debt to GDP has shot up like a rocket since 2008…

National Debt As A Percentage Of GDP

At this point, the U.S. already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.  It is a giant mess, and yet our politicians continue to recklessly spend more money.

And of course state and local governments all over the nation are drowning in debt too.  The bankruptcy of Detroit is forcing people to come to grips with how bad things really are.  Sadly, as Meredith Whitney explained the other day, there are going to be a lot more municipal bankruptcies coming down the pipeline…

As jarring as the reality may be to accept, Detroit’s decision last week to declare bankruptcy should not be regarded as a one-off in the US municipal market – which is what the bond-peddlers are now telling their clients. The aftershocks of the largest municipal bankruptcy in US history will be staggering, and Detroit will set important precedents.

Municipal bankruptcies have historically been rare for a number of reasons – including the states’ determination to preserve their credit ratings, their access to cheap funding and the stigma of bankruptcy. But, these days, things are very different in the world of municipal finance.

At the root of the problem is the incentive system that elected officials used to face. For decades, across the US, local leaders ran up tabs for future taxpayers; they promised pensions and other benefits for public employees that have strong legal protection. That has been a great source of patronage for elected officials: they can promise all sorts of future perks to loyal supporters (state and local workers) with very little accountability on the delivery of those promises.

And of course the overall debt level in the United States continues to grow much, much faster than our overall economy is growing.

The greatest debt bubble in the history of the planet is still expanding.

How long will it be before it bursts?

That is a very good question.  For now, our “leaders” appear to just be trying to keep the party going for as long as possible.  They know that if they suddenly change course hard times will hit almost immediately.  For example, just check out what Federal Reserve Chairman Ben Bernanke told Congress last week

With the economy still facing risks, especially from government spending cuts, Bernanke told a congressional panel on Wednesday the Fed is still planning to trim its quantitative easing stimulus, if growth continues at a steady pace.

But expectations that the Fed was poised to start tightening monetary policy, which have sent interest rates jumping and sparked turmoil in global markets, were unwarranted, he stressed.

“I don’t think the Fed can get interest rates up very much, because the economy is weak, inflation rates are low,” Bernanke told the House Financial Services Committee.

“If we were to tighten policy, the economy would tank.”

Nobody wants the economy to “tank”, but the truth is that the more debt that we run up, the larger our long-term economic problems become.

And a growing percentage of Americans realize that something has seriously gone wrong.  According to a recent Pew Research survey, 44% of all Americans believe that an economic recovery is still “a long way off“.

Unfortunately, the reality of the matter is that we are already living in the “economic recovery”.

This is about as good as it is going to get.

The truth is that the real storm has not even hit yet.  When the debt bubble finally bursts, we are going to see economic chaos in this country unlike anything that we have ever experienced before.

I hope that you are getting ready.

  • jakartaman

    In my humble opinion there will be a total world economic collapse. When – soon – what will be the straw that will be the trip wire – Israel/Iran
    We will be in a tail spin back to the 1850’s
    food wars, civil disobedience, barter, local farming

    • Gay Veteran

      the misery will be more like Argintina, really bad but bearable

      • Mudpie

        Yep, I suspect you are right. We will have a surveillance misery govt. and some people will be able to make lives for themselves outside of the matrix, in the cracks . . . finding happiness in things of permanent value. My guess anyway. But millions will be savaged. Hope my family is not one of them : (

  • JailBanksters

    It’s not that bad, the total Interest on all debts is only 2.8 Trillion, wait 2.9 Trillion

  • seth datta

    Bankers will draw this out to further tire and weaken the population, possibly for another year or even past a decade. Once their pawns (countries taken over by their assets) on their global checkboard is in place, they will close the net. The current European austerity and middle eastern violence is due to their machinations as they try and put their final pieces into place.

    • sybille

      I believe you are right, it is due to their machinations. But I also believes it is now out of their control and that there is no way they can return the runaway collapse to some kind of order where they can regain control. It is now like a runaway bus heading to a cliff with no driver and no brakes.

  • K

    How long can it last, not much longer. If you go by the laws the Government is passing, they expect major trouble. We are going into month number 8 of the ammo shortage. The producers claim they are maxed out, but barely a trickle gets to the public. Its’ going somewhere. More and more people are spotting the new heavily armored homeland security vehicles. They are holding more military drills in urban areas. The last couple of nights, it has been Chicago. Before that they have been in Miami, Tampa, Los Angeles, Dallas, New York, and many others. Ever remember them doing urban combat drills in major cities before? All the warning signs are there. People who do not see them, are choosing not to see them.

    • Shmeggle Marxist

      I have seen a set of 4 black helicopters flying overhead on multiple occasions.

      • K

        I used to think the idea of a black helicopter was odd. It sure sticks out when flying through the sky. Then I remembered many people are intimidated by the color black. So black helicopters, black armored personnel carriers, black swat uniforms, in short it is all meant to intimidate. Not the U.S. I grew up in.

    • sybille

      But if the financial system collapses chances are they wont have the money to pay soldiers with. So there out the window goes the elite rulers chances of keeping in power or keeping the masses in line lol.

      • K

        Tim soldiers not being paid is nothing new. Often times they are issued military script, which is redeemable for money somewhere down the road. Other times they stay on duty for the food and supplies, they and their families get. You can not really be much of a prepper on a military salary. Also all the troops will not be American. FEMA just three weeks ago signed an agreement with their Russian counterpart. Both countries have agreed to send up to 10 thousand troops in, if the other country requests them during an emergency. That is right the U.S. will allow Russian troops on American soil, in case of an emergency. Yup, nothing odd about that at all.

        • K

          Sorry this comment was meant for sybille.

        • chris

          The reason being that TPTB know that American troops would be reluctant to fire on fellow Americans whereas foreign troops in the USA ,eg Russians, will not be so reluctant. Likewise American troops in Russia will not be so reluctant to fire on Russians etc…

        • Herman

          K,. we in South Africa believe in a seer called Siener van Rensburg. His visions were 100% accurate so far. Most of his visions have occurred years ago. For the US he predicted that the US will be enemy no 1 for Russia. So the probability that Russia will help the Us government to oppose the americans, is none. So far he was spot on with the European crises. He was also spot on with the dept crises of the US and Uk. There are 3 videos in English available on u-tube. He was my wife’s grandfather’s nephew, so our family all believe in him.

          God bless!

    • Justin Staley

      The ammo is getting to the public even though it doesn’t seem it. I have been able to score a few thousand rounds over the last two months, but it has not been easy. Most of it came from Cabela’s on line. Go to any Walmart early in the morning and watch what happens. Most of them open the sporting goods counter at 7 am and the ammo that came out is put on the shelves. There is a line at the counter at 7 am buying the ammo as fast as they can unpack it. An associate at my local Walmart told me the other day, they can’t get it on the shelves. They sell it as fast as they open the boxes. I check several different on line vendors like Cabela’s and Midway for new stock quite a few times a day and usually get lucky about once a week, but even these vendors sell out almost as soon as they list it.

      • K

        I agree there has been some improvement, if you know where to look. But the days where you could walk into a store, and ask for 357 mag. And be shown 4 or five different types does not seem to be returning.

      • TJJackson1

        There is not much of a shortage here in Arizona. Everyone that wanted ammo bought it a long time ago. The high priced rounds are going to the liberals and they cannot afford much…LOL

  • MeMadMax

    I give us 2-3 years. Maybe less. It’s hard seeing past a year, and that is NO way to be planning for the future….

    • jakartaman

      You maybe correct in the 2-3 year time frame but I believe we are on borrowed time now – The collapse only needs a little shove

  • Tim

    The next increase in the U.S. statutory debt limit–a few months from now–could be the catalyst for the next downturn. Foreign holders of U.S. Treasuries have decreased their holdings in recent months. Hong Kong and Singapore reduced their holdings by 6%. Thailand reduced its holdings by 20%! Overall, foreign ownership of U.S. debt fell below 50% for the first time in more than a year. So how is the Federal Reserve going to stop monetizing?

  • Shmeggle Marxist

    we’ll be driving studebakers in no time

    • Robert (qslv)

      Cuba has plenty of Studebakers.

      • Shmeggle Marxist

        thank you for catching that

  • markthetruth

    Watchdog: Borrowers in Obama housing program re-defaulting

    306,000 borrowers have re-defaulted on their loans, SIGTARP says

    the end

    • Tim

      Oh, no worries. The Obama administration will come up with some other kind of “program” to prevent another foreclosure crisis. After all, they’re trying to reinflate the housing bubble. And they can’t have another glut of vacant houses coming onto the market at such an inopportune time.

  • markthetruth

    Sales of newly built homes rose last month to hit a five-year high in June, as the nation’s housing market showed little sign of slowing in

    They stole the sales from May which makes May a dismal Slump Month Which they don’t tell you !

    the end…

  • markthetruth

    In a ‘Walking Dead’ market, stocks ignore the zombie killers

    the end…

  • 2Gary2

    Tax the rich to pay our debt.

    • Shmeggle Marxist

      you are so clueless, you are comical

    • Robert (qslv)

      The rich are the tax collectors. Gary wants the rich to go tax themselves. Gary is a genius. He should challenge Anthony Weiner to a “what fer” contest.

    • ΔИθᴎЎϻɸᵿƧ

      Can’t do that. It’s the rich that make tax law (CongressCriminals). It’s the rich that lobby Congress with their money. You really think they’re going to allow themselves to be taxed the way we think they ought to be?

  • Rodster

    Don’t kid yourselves, this ponzi scheme can go on for as long as TPTB want it to. The catch of course is an EVENT, just something totally out of left field that lights the fuse. At that point It’s run for the hills cause it’s going to get ugly.

    Eventually the collapse will be so horrific that commerce around the world will come to a screeching halt. Right now the banksters are trying to rewrite the laws of mathematics. Good luck it doesn’t work. And mathematics says the $1.6-1.8 Quadrillion total debt on derivatives will never be paid back. And mathematics says at some point a nasty reset will occur.

    Unfortunately we have corrupt, incompetent criminals of both parties running Washington with Helicopter Ben paying for their parties.

    • Mudpie

      And this is what is just a TAD bit different than the 1920s depression days and other crisis times for the USA, that is, our leaders have grown exponentially more sleazy.

  • TJJackson1

    Have to love his statement that the “economy would tank” if they raised interest rates. How nonchalantly he describes the collapse of western civilization. If you ignore reality, you will not lessen reality’s bite. It is going to bite very hard and probably quite soon. The future belongs to the prepared..!

  • skywatcher

    Well maybe due to the pending collapse the NWO won’t be able to afford to keep up the chemtrailing, fluorididation of public water, and the other diabolical eugenics programs.

  • rat28

    Debt is the only ways to keep our modern way of life going..Any thing to curtail it, will mean our civilization falling back to the 16th century.. No electorate will have the courage to vote against status quo.

    • Jimbo

      Debt is parasitic. Debt is not a requirement for an economy. I have a chicken and it lays eggs, you make bread. I exchange eggs for bread. Someone down the road has cows and they make milk. Perfect economics. It becomes complicated when someone buys my egg futures with paper fiat that is “worth” 2 loaves of bread and exchanges them for milk futures. Someone who has never collected an egg or milked a cow becomes very rich just by trading milk and eggs. From that point forward, you get rich people who own a lot of egg futures and poor people who owe a lot of bread. Then the governments come in and remove your ability to keep chickens (by placing you in a city). It doesn’t matter though because your government will provide for you in old age by saving your eggs and paying them back to you later on. Meanwhile, they have used the eggs you saved to pay eggs they already owed to someone else. etc. etc. etc.

  • james

    Obama finished off America in 08.He was only obeying his handler.The planned collapse of all economies is right on shedule.The new monitored trading currency is already being implemented I am sure;we will hear about it soon from some whistle-blower ,It will probably be the Shekel.

    • ΔИθᴎЎϻɸᵿƧ

      There’s an international currency known as “Special Drawing Rights (SDR),” defined and maintained by the IMF. It can be exchanged for dollars, yen, euros, or pounds sterling.

      Today, SDR isn’t technically currency as any of us peons know it; that is, it’s not for private sector use. It currently represents a claim to currency held by IMF member countries.

      I imagine it’s probably a common currency accepted at the Bank of International Settlements for exchange between those four central banks.

  • Gregge K Johnson

    Kuma Matada. The compcontroler in Belgium of the Federal Reserve and ECB , Will hit the Delete button on all those zero,s The Elite will still have control as they have had for centuries ! The same compcontroler of SWIFT ((( BIS ))). Will hit the Reset button and the Global Economy will start all over again .. It will take 90 days

    • chris

      Can’t see how this would work, it would be utter chaos, globally.

  • edrobar2978

    There’s been no real economic growth since 2000. The sense of wealth was produced by the increasing of debts. We are since 1980 in living in a fuel-debt economy, and the soaring trend of the debt level is not going to end. Governments needs to borrow money to pay off the interest incurred from former debts. Is this rational? Of course not, but it has been the only way to continue this illusion of ‘Perpetual Economic Growth’.

  • Jimbo

    There is nothing to worry about. Chinese workers will be happy to toil for 10 hours a day 7 days a week to keep us supplied with flatscreen TV’s. They will be happy reading the news on the internet that Americans and British get to drive around in big cars while they walk 10 miles to work. Chinese workers will carry on doing this forever as long as we give their government IOU’s for the stuff we bought. We can keep on racking up the debt forever and using far more than we produce because Chinese people are happy to produce far more than they consume for our benefit. Thankyou very much kind Chinese people/

    • bdvfd

      Is it possible to turn any of it around by just buying local?

  • Jimbo

    Debt explained. I have a chicken and you want six of my eggs. You make bread and I normally exchange eggs for bread at 6 eggs to 1 loaf. You can’t give me bread at the moment but you can give me a “promise to pay” which is a piece of paper offering me a 1000th proportion of your wealth. You are worth 1000 loaves so I assume the piece of paper is worth 1 loaf of bread. We carry on this exchange for a number of years and I now have 500 bits of paper worth 500 loaves of bread (or so I believe). However, you have made similar promises to other farmers and when we all gather together to talk, it turns out that you owe 20 trillion loaves of bread in total. My 500 bits of paper that was worth 500 loaves of bread (or half of your wealth) turns out to be a tiny percentage of your wealth and less than a loaf of bread in total value. I am stuck in a rut though. I have built up an egg supply industry based on your promises to pay and I have been using those promises to pay to secure my own debt. Do I carry on supplying you with eggs hoping that one day you will pay me back the 500 loaves or do I stop supplying you and therefore destroy my best customer (and my egg business).

  • markthetruth

    They are now trying to say that we have more then enough Assets cover the Debt .

    Well to me the only real Assets we have are the Citizens of The U.S. Without us they can come up with any number they Want But it won’t be real.

    the end…

    • ΔИθᴎЎϻɸᵿƧ

      The U.S. owns a lot of land, buildings, other properties, and supposedly gold and silver too, but all of it won’t cover the whole debt.

  • Theodor-John

    Hmmm… just a silly idea: what if the elites of today (Rockefeller, Rothschild, the bankers, the super rich families, the Bilderbergers, etc), what if all these people are nothing but puppets that will be “declared” scapegoats and sacrificed by the real elites, when SHTF?
    Kind of like when communism came to Russia and Eastern Europe, the apparent elites of those days (the rich people) were identified as the guilty ones and sacrificed, their possessions confiscated, etc.

  • Randy Townsend

    Buying from these guys for quite a while: It’s in stock, fairly priced, and quick delivery. TJJAckson got it right: The libs are the ones who are going to pay the highest prices – they believe the government will take care of them…

    • Gay Veteran

      The liberals I know are well armed.

      • Randy Townsend

        We know different libs: Most of my leftist friends treat weapons like a rattlesnake.

        • Gay Veteran

          dangerous to generalize

  • Patrick

    That is why all the nations are getting ready for the next war. This is all history happened back in world war 1, then world war 2 and now its going to be world war 3. We haven’t learned from history so history keeps repeating itself. Start preparing and pray also

  • Hello, newbie here!

    What does it mean “when the debt bubble finally bursts”? Who decides that, or what will that look like?

    Also, interesting is that a country like the US has a Government debt to GDP of 102% and a “second world” country like Bulgaria, only has a debt of 19%.

    That’s good, right? Does that mean that the Economic collapse will have a bigger effect on the US than on Bulgaria?

  • GSOB

    “The government is good at one thing. It knows how to break your legs, and then hand you a crutch and say, “See if it weren’t for the government, you wouldn’t be able to walk”.”

  • Softpaw23

    Soaring debt levels are the inevitable result of having money lenders control the money supply.

    It took less than 20 years after the creation of the Federal Reserve to have a debt-fueled asset bubble wreck the U.S. economy.

    The response? The creation of the debt-creating welfare and warfare state in 1933 and 1945.

    When the world wasn’t indebted and in ruins from World War Two, the game was easy. Now that the rich world is awash in debt and rebuilt, and China has reached the end of double-digit growth, there are no more easy high-return growth stories.

    What will be the Elite’s response? I don’t know, but one thing is certain: the same powers with the most today will make every attempt to game the new situation so that the masses stay dependent, “leaders” remain puppets for Western interests, power continues to globalize and concentrate, and the majority remains blind/indifferent to these facts.

    Rather than complain or raise my fists, I say take action. Get out of debt in your own life and invite others to do the same. Work to remove the money supply power from the Fed and restore it to the people and Treasury, its Constitutional home. Laugh at the programming blabbing at you from the radio and television. Love the people others tell you to hate, including the ego-driven manipulators directing this global show. Hating others continues the divide-and-rule strategy the Sumerian approach has used to such great effect for so long.

    And how you treat others is a reflection of how you treat yourself.

  • Dale Holmgren

    The world’s wealth will not go away; just the paper representations. Gold will prevail.

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