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The Debt To GDP Ratio For The Entire World: 286 Percent

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Global Debt - Public DomainDid you know that there is more than $28,000 of debt for every man, woman and child on the entire planet?  And since close to 3 billion of those people survive on less than 2 dollars a day, your share of that debt is going to be much larger than that.  If we took everything that the global economy produced this year and everything that the global economy produced next year and used it to pay all of this debt, it still would not be enough.  According to a recent report put out by the McKinsey Global Institute entitled “Debt and (not much) deleveraging“, the total amount of debt on our planet has grown from 142 trillion dollars at the end of 2007 to 199 trillion dollars today.  This is the largest mountain of debt in the history of the world, and those numbers mean that we are in substantially worse condition than we were just prior to the last financial crisis.

When it comes to debt, a lot of fingers get pointed at the United States, and rightly so.  Just prior to the last recession, the U.S. national debt was sitting at about 9 trillion dollars.  Today, it has crossed the 18 trillion dollar mark.  But of course the U.S. is not the only one that is guilty.  In fact, the McKinsey Global Institute says that debt levels have grown in all major economies since 2007.  The following is an excerpt from the report

Seven years after the bursting of a global credit bubble resulted in the worst financial crisis since the Great Depression, debt continues to grow. In fact, rather than reducing indebtedness, or deleveraging, all major economies today have higher levels of borrowing relative to GDP than they did in 2007. Global debt in these years has grown by $57 trillion, raising the ratio of debt to GDP by 17 percentage points (Exhibit 1). That poses new risks to financial stability and may undermine global economic growth.

What is surprising is that debt has actually grown the most in China.  If you can believe it, total Chinese debt has grown from 7 trillion dollars in 2007 to 28 trillion dollars today.  Needless to say, that is absolutely insane…

China’s debt has quadrupled since 2007. Fueled by real estate and shadow banking, China’s total debt has nearly quadrupled, rising to $28 trillion by mid-2014, from $7 trillion in 2007. At 282 percent of GDP, China’s debt as a share of GDP, while manageable, is larger than that of the United States or Germany. Three developments are potentially worrisome: half of all loans are linked, directly or indirectly, to China’s overheated real-estate market; unregulated shadow banking accounts for nearly half of new lending; and the debt of many local governments is probably unsustainable. However, MGI calculates that China’s government has the capacity to bail out the financial sector should a property-related debt crisis develop. The challenge will be to contain future debt increases and reduce the risks of such a crisis, without putting the brakes on economic growth.

What all of this means is that our long-term global economic problems have gotten much, much worse.  This short-lived period of relative stability that we have been enjoying has been fueled by unprecedented amounts of debt and voracious money printing.  Anyone with half a brain should be able to see that this is a giant financial bubble, and in the end it is going to unwind very, very painfully.  The following comes from a Canadian news source

At the beginning of 2008, government accounted for a smaller portion of the debt pie than corporate, household or financial debt. It now exceeds each of those other categories.

The current situation is much worse than in 2000 or 2007, and with interest rates near or at zero, the central banks have already used up their ammunition. Plus, the total indebtedness, especially the indebtedness of governments, is much higher than ever before,” said Claus Vogt, a Berlin-based analyst and co-author of a 2011 book titled The Global Debt Trap.

“Every speculative bubble rests on some kind of a fairy tale, a story the bubble participants believe in and use as rationalization to buy extremely overvalued stocks or bonds or real estate,” Mr. Vogt argued. “And now it is the faith in the central-planning capabilities of global central bankers. When the loss of confidence in the Fed, the ECB etc. begins, the stampede out of stocks and bonds will start. I think we are very close to this pivotal moment in financial history.”

But for the moment, the ridiculous stock market bubble continues.

Internet companies that didn’t even exist a decade ago are now supposedly worth billions upon billions of dollars even though some of them don’t make any money at all.  There is even a name for this phenomenon.  Internet companies that have gigantic valuations without gigantic revenue streams are being called “unicorns”

A dizzying mix of bold ideas and lavish investments has catapulted dozens of privately held start-ups to unicorn status, defined as having market valuations of at least $1 billion often without soaring revenues to match. Social-sharing site Pinterest has soared to $11 billion. Ride-hailing company Uber is now worth a staggering $50 billion.

How long can the party last?

And these days, Wall Street even rewards companies that lose huge amounts of money quarter after quarter.  For example, just check out what happened when JC Penney announced that it only lost 167 million dollars during the first quarter of 2015…

Yippee!!! JC Penney ONLY lost $167 million in the first quarter. The Wall Street shysters are ecstatic because they BEAT expectations. Buy Buy Buy.

This loss now brings JC Penney’s cumulative loss since 2011 to, drum roll please, $3.5 BILLION. They haven’t had a profitable quarter in over four years. But, they are always on the verge of that turnaround just over the horizon.

Wall Street has told you to buy this stock from $42 in 2012 to it’s current pitiful level of $9. They tout the wonderful 3.4% increase in comparable sales. They fail to mention that first quarter 2016 sales are only 30% below first quarter sales in 2011.

They fail to mention that JC Penney burned through another $274 million of cash in the first quarter. Their equity has dropped by $1 billion in the last year, while their long term debt has gone up by $500 million.

This is how irrational Wall Street has become.  JC Penney is ultimately going to zero, and yet there are still people out there that are pouring huge amounts of money into that financial black hole.

Sadly, the truth is that Wall Street is headed for a very painful awakening.

What we are experiencing right now is the greatest financial bubble of all time.

What comes after that is going to be the greatest financial crash of all time.

199,000,000,000,000 dollars of debt is about to come crashing down, and the pain of this disaster will be felt by every man, woman and child on the entire planet.


  • El mico


  • El mico

    Time to wake up America.
    No, seriously.
    I’m in another country and your still asleep.

    • df NJ

      A lot of people living here are NOT able to sleep at night. Does that count?

  • James

    I think next fall in 2016 stocks crash it’ll be 2008 without all of the money for another bailout.

    • Zenithon

      Maybe we shouldn’t have had the bailout the last time. A reset might have been much more painful for awhile, but it would have been over by now. New strong companies with better models could have replaced the old guard that expects Uncle Sam to step in when ever they screw up. I’m sure they’l find a way to keep them all in business this time too. Just borrow another $15 trillion, raid the public and/or private retirement systems, or who knows what.

      • Rick

        There is no possible way other than raiding pensions and bank accounts worth approximately $18 trillion to do that. It will come down to how strong the will of the people is vs. this Facsist government.

        • alan

          I am pretty sure they will do anything in order to keep themselves in power.

          • Drud

            Of course they will try to keep their power, alan. Such is the ONLY goal of powerful people. The question is will they be able to…will the people allow them to?

            I honestly do not know.

        • Avner

          Oh you know they are going to get raided.. no doubt. You know, if you don’t like it you’re “racist.” Or whatever.. but yeah. They’re gonna steal it all.

    • Rick

      It will most likely start in the fall of 2015, but will be a 10.0 on the rector scale, and will still have powerful shock waves in 2016. The gig is up, we’ve all come to the curtain and are ready to expose the grand wizard.

      • Guest


        • Malcolm Reynolds

          We all gonna be screwed in the back door by this one.

    • alan

      I think stocks won’t crash because we can print any amount of money to cover it. Its work fine so far.

      • Evil_shadow

        It did fine for Yugoslavia too.For some time.but in the end, infation took over and it was game over for yugoslavia (political and monetary union).I dont think you’d want to much money (eso. FIAt money that is ), inflation can be bitch to fight…

    • Catman

      That’s where the bail-ins will be employed. That’s why banks will tighten cash withdrawals and use of cash for many transactions. They now have the legal authority to seize bank deposits in the event of bank losses. All depositors are now considered investors in the bank in which they make deposits. However, depositors do not share in the profits of the bank, only the losses. Great deal for the banks, no? Not sure if this applies to credit unions.

      • Avner

        CU’s operate under the same regs

  • Richard

    “If you can believe it, total Chinese debt has grown from 7 trillion dollars in 2007 to 28 trillion dollars today. ”
    And, please, what if I CAN’T believe it?

    • Richard

      Actually, this is a very good article, Michael. Just stay away from the cliches!

      • MichaelfromTheEconomicCollapse

        I shall try Richard. 🙂

    • alan

      No body is reporting correct number, so no you can’t believe anything. There is so much propaganda and counter propaganda there is no way to know whats really going on. Quoting any numbers is pretty much meaningless.

  • K

    It is a bubble, but a bubble with a purpose. Drain as much money from the middle class, to the rich as possible. And it has worked very well doing that very thing. Also watch real estate, and you will know how close you are to a breaking point. Check out how many estates in the Hamptons are up for sale. The rich haven’t started losing any money yet. But in spite of that there are more places for sale in the Hamptons, then I have ever seen. Just where are all these folks going? Out of the Country I suspect.

    • Tatiana Covington

      Earth is a small place these days…

  • Catman

    I think most people look at China’s Debt/GDP ratio and that they have only a $7 trillion economy while our economy is twice that and just go back to sleep. No one in Congress or Wall Street seems concerned about the mounting debt. In fact, as long as debt continues and grows everyone feels safe. Governments are only worried if a lot of investors decide to liquidate their debt. If that ever happens inflation would go through the roof with all the dollars, yuan, or whatever flooding the system. There are lending institutions and transactional banking houses making billions off of servicing debt. They’ll not give it up. That’s why banks are methodically herding us toward reduced use of cash for major purchases. They want our deposits “stuck” in a bank as an added security in case their is a run on the banks. They’ll use those deposits to help cover their losses. Meanwhile the IRS and local governments are seizing entire accounts without explanation when they see a couple of deposits just below $10,000. I believe one of the reasons these incidents are increasing is to psychologically condition the populace that their savings/deposits can be seized.

    • Avner

      China is a 16 trillion economy.. want to hear the funny part? They ran up the debt with our currency. They blew that bubble on purpose. Ruthless really.

      Did you see the news article, maybe two, by bankers stating that we should have controlled bank accounts. You know, to be made to spend money when they need the stimulate the economy and to cut it off when they feel we are doing too much with our money.

      Hey in Cyprus they already did a bank “haircut.” You know, they stole their money. The old saying that you don’t own it if you don’t touch it is so true. There is language in OUR banking laws to seize our deposits, because you know, we’re unsecured creditors for the banks. The only bright side to this that I see, is that all the “CJ” supporters who wanted change are going to get exactly what they asked for. Like the ants on the end of a burning stick.

      • old fart

        They have a sneakier way to grab the accounts as they have declared savers in the banks as investors in the banks, So when they close the banks the ( share ) holders are left out in the cold. The same trick they pulled on the share holders of General Motors.

  • Annette Smith

    MIchael…we are in Phoenix and every night, there is a story on the news here of another landmark bistro or restaurant closing. Now, there is a ton of business here in PHoenix, specially since Pay Pal, Google, Facebaook and INtel are here…so why are the restaurants that catered to them closing? I think this is a story to investigate.

    • MichaelfromTheEconomicCollapse

      That is a very good question Annette. I do know that the restaurant business is absolutely brutal. So many go under even during the best of times.

    • El Pollo de Oro

      Annette: Here in Philly, overpriced restaurants are booming in some parts of town (that’s in the expensive, gentrified areas). But that isn’t saying much because in Third World countries, you typically find pockets of prosperity and affluence along with widespread poverty and deprivation. As the BRA goes from bad to much worse, you will find a minority of haves and an angry, desperate majority of have-nots.

      • Avner

        Yeah… rich restaurants in Olde City or in Society Hill. Yet, the badlands isn’t far from there, the part that makes some third world places look civilized. I hear though that Nutter’s replacement is going to tax more.. you know.. for the PSEA er I mean the schools

        • El Pollo de Oro

          Avner: if you wanted to get from Olde City to the Badlands, all you’d have to do is hop on the bus that goes north on 3rd Street. You could get on at 3rd & Market, keep going north until you get to about Indiana Avenue, and get off in the heart of the Badlands (not that I would recommend doing that). Those areas in the Badlands (West Kensington, Hunting Park) are still really hardcore. Boarded up buildings, crack whores with missing teeth, shootings every night. Whole Paycheck hasn’t moved into those areas yet.

  • Genada

    Peak debt is what we are at and that’s why growth is stalling. There is no wage growth, there is no wealth effect for the majority. So the economy has split apart, those at the top and everyone else. Those at the top are doing very well while those not at the top keep losing ground.

    It’s going to keep being a slow grind down for the majority for all populations till either they decide to wreck it or a accident happens. As far as the stock market goes, you can not really be sure if it goes to the moon or if it will crash. Either are possible even with a failing economy. People need yield and the only game in town is the stock market, there’s no where else to put it right now. Banks offer nothing on savings, bonds have been pushed low, only the market offers a chance to make money.

    If you think were going to have a deflationary depression then the stock market will crash and burn. If you think it’s going to be super inflation then the market is going to the moon.

    • Avner

      My opinion is that the stock market won’t crash, it’ll balloon like Zimbabwe and Weimar Germany did. However, the currency will be totally undermined if not outright worthless. Hey.. look at it this way. If the dollar is so strong, howcome you can’t fill up a shopping cart at the grocery store for under $100? Every fiat currency is falling, we’re just a foot above the rest for now.

      What you’re really seeing is a transfer of wealth and resources to those 0.1 percent who are infatuated with absolute power and control and see you, and I, as lower than cockroaches.

  • Antonio Ossa


  • df NJ

    The brat grandchildren children of the first billionaires of the World want to destroy who is going to stop them. Wage depression is only going to get worse. There simply isn’t high enough wages to pay off the national and international debts. Maybe gold will become $40,000 and oz or higher. At some point since wages are so stagnant people are just going to walk away. What difference does working of owning a house make?

  • Graywolf

    20 dollar bill picture / help save our 20

    Off subject comment, please excuse but I had to say

    Have you heard about the movement to get a women’s picture
    on the twenty dollar bill? It seems a group has formed for this purpose and they have taken a vote selecting from a group of some famous women and selected one which they are going to try and get approved to replace Andrew Jackson’s picture on the twenty dollar bill.

    This is ridiculous! Over the years the “banksters” and the Fed
    have destroyed the real value of the dollar, and now a special interest group wants to deface, devalue and further destroy even our traditions with the money we use. The woman selected in their
    voting is not even a former First Lady. Other than Ben Franklin (sort of the father of our founding fathers) all pictures on paper currency that we use daily are of former Presidents. Why should a “commoner’s” picture be on our paper currency, just because she is a woman who has done something, and was voted the most popular by some people? What is wrong with Andrew Jackson? He is a famous President, having fought and won the Battle of New Orleans in the War of 1812, etc. (I think Charlton Heston played Andrew Jackson in the movie The Buccaneer which had the Battle of New Orleans in it, and there was a pop / country song about this Battle… “In 1814 we took a little trip – Along with Colonel Jackson down the mighty Mississip..…Old Hickory said we could take ‘em by surprise – If we didn’t fire our muskets ‘til
    we looked ‘em in the eye..…we fired our guns and the British kept a comim – There wasn’t nigh as many as there was a while ago. We fired once more and they begin to runnin’ – on down the Mississippi to the Gulf of Mexico…”). And also President Jackson is arguably / perhaps the best looking of the Presidents on our
    bills. When I see a paper currency note and see Jackson’s picture, it means $20.00 to me.

    Our money is for all the people and we honor the memory of
    past Presidents by having their pictures on our money. To replace one of their pictures just to satisfy the special interests of some people would be a disgrace. If this happens to happen, I for one will not use this new twenty dollar bill. If it is given to me in change or something I will ask to have it changed for money with a President on it, for two 10’s, or four 5’s or twenty 1’s, or anything
    but this new abominable, atrocious, blasphemous, deviant, disgraceful, disrespectful, shameless and scandalous sacrilegious twenty.

    Who will be removed from our currency next? George Washington? Thomas Jefferson? (on $2bill) Abraham Lincoln? Alexander Hamilton? Ulysses S. Grant? Ben Franklin? And other Presidents on larger denominations? (Unfortunately, I have none of the larger bills right now).

    Stop this charade! Stop this defacing and debasement of our
    traditions! Write your congressmen! Write everyone!

    If we do not act now, what will be next? Will other special interest groups take a vote to have one of their own put on another denomination of our paper currency? How about the “Gays”? After all if a women’s group can do it why not the Gays? They could take a vote and elect one of their most famous people, and then petition for this “Queer’s” picture to be put on our paper currency.
    Perhaps put it on a new denomination, like a $3.00 bill.

    • Genada

      Hamilton was never president, he was the first Secretary of the Treasury.

      As for Jackson,, he is a true hero but I would support removing from the 20. The reason is he would hate the 20 and all our phony money. To stick him on the most used Federal Reserve note, something he fought against is shameful and a mockery of him.

      Take Jackson off the 20 and place him on a 20 dollar gold piece, that’s what we really need.

    • realfinney

      In Britain we have plenty of women on the currency (aside from Liz), but we’ve had alot of amazing women excel in fields like writing, health care and the judiciary. Perhaps you have a failure of imagination.

    • John H. Ruszkowski

      If they change the person on $20 with a women with insignificant importance then I will refuse to use this bill. If enough people will refuse to use it, will die like the $2 bill. Strength in numbers.

    • Gay Veteran

      jesus Christ, the country is crumbling and you’re worried about who is on the $20 bill?!?!?!?!?

      “…How about the “Gays”? After all if a women’s group can do it why not the Gays? They could take a vote and elect one of their most famous people, and then petition for this “Queer’s” picture to be put on our paper currency….”

      awwwww, what’s wrong? can’t get away with using the N word?

  • Rick

    So most of us don’t have $28,000 lying around. When this all happens won’t debt have to be forgiven or readjusted downward? Interest rates can only go in one direction from here, so won’t we on a personal level be able to pay off debt with devalued almost worthless money once the velocity of the dollar picks up? So my question is, is it best to carry a lot of debt now, or to try to climb out of debt? Maybe we should use what little money we have now to invest in tangible goods that can be stored, or used for barter, and just let our personal debt ride out the storm for now?

    • Catman

      It’s always best to be out of debt if possible. “The debtor is servant to the lender”. Not trying to make a theological point, but bankers have always known this through the centuries. That’s one major reason they fight so hard to establish central banks to issue the currency in the name of the treasury.

      • GSOB

        The bankers stole the wisdom out of the bible.

    • Avner

      IF everyone said no and resoundingly said no, when they popped the bubble it’d be over. Most though, wont’ say no. They will make every excuse to themself as to why they will play in their system and sell their soul for a worthless piece of paper.

  • grumpyhillbilly

    Debt enriches the financial professional class. I doubt they even care about debt. When default happens, they are first in line to cherry pick over the hard assets. This past century has seen the wealth leave the hands of the blue bloods and entrepreneurs to only go into the money boys. Government is nothing more than the tool of choice.

    Curious about China. The corporate boys made them. Does that mean their financial counterparts plan on collecting the Chinese gems? Or will this wind up like another Russia with the nationalists taking control? Too bad the future is rather ominous, since we really are living in interesting times.

  • alan

    I don’t think anyone really knows what the numbers are. We’ll know when a state of emergency is imposed.

  • chilller

    Just a quick look on Zillow shows about 800 homes over $1M for sale on Long Island and about half are over $5M. That’s a lot.

  • Arizona

    CONSIDERING america has HAWKED everything, including you and your children,your land,and everything you own,TO THE CHINESE,it was kinda stupid to quite paying the interest on the BORROWED MONEY,cause NOW they have SUED YOU IN WORLD COURT,and you lost america,CHINA will be coming here shortly to take everything there is to be had,AND THE UNITED NATIONS SOLDIERS WILL BE HELPING THEM,and your broke,to bad,SLAVE CAMP FOR YOU,and those kids you hawked to them……………..

    • DJohn1

      I suggest we give them the millionaire congress crowd along with their families as slaves.
      Next would be everyone in the EPA and the IRS.
      Then every billionaire out there.
      Last but not least every lawyer.
      That should take care of most of the parasites that would not work anyway.

  • DJohn1

    Economics 101.
    This nonsense started in the great depression of the 30s.
    Spend your way out of debt. The guy that started it all ready bankrupted himself and his mother-in-law before moving on to the greater pie of government spending.
    His theories are nonsense. But they are practiced by all the major economics courses in the world. The minority theory is the Emperor has no clothes debate. It is ignored mostly by economists with good government backing.
    Where is it all going? I suggest it is going to one of the biggest crashes in American economics in the history of this country.
    China is no better. They are actually practicing the same kind of economics there as what we are practicing here.
    If the world has a population of 7 billion people then you have to have enough money for them to do business. Expanding the amount of currency to allow this to happen is why we have printed money with little backing it.
    The resources behind the money are the same. The population however has grown. Government answers this by inflation.
    Too much money? Then it has to be withdrawn from circulation in one manner or another. But then you have too little chasing too little amount of commodities.
    England is a prime example of what I am talking about. I was last there in 2007. A computer printer cord that I can get here for a few dollars was going for $15 dollars in England. Value added taxes and other economic forces meant that all the prices on commodities were going through the roof! It wasn’t just one item it was everything.
    Gasoline was sold by the British quart or litre. We are one of the few countries left in the world that still use the old measures.
    I still find it a little frustrating trying to convert Centrigrade to our temperature gauges.
    What is happening there will happen here 10 years later. The difference is population density. They have about 1/3rd or more of the population of the United States on a very small land mass.
    Every day I could go out on the Thames river to London and see massive freighters transporting goods into the country.
    An Island only works as well as its ability to be independent of the world as far as food and other resources go. This Island passed that point over half a century ago.
    What happens when a currency goes bust? Check what happened to Britain from 1945 on.
    Well we are there. We are busted.
    Momentum is the only thing keeping this economy from going belly up right now. When that stops, all hell will break loose.

    • GSOB

      We are busted.
      America will be victorious.
      We have elections.
      We can pray to God our Father for His
      care and to give us a spirit that prepares us to meet Him.
      Take care


    • df NJ

      I already live in New Jersey.

  • El Pollo de Oro

    As toxic as The Banana Republic of America’s financial system was in 2008, it is much worse now. The banks are a lot more leveraged, too big to fail is much bigger, exposure to derivatives (which Warren Buffett calls “financial weapons of mass destruction”) has grown by leaps and bounds. Millions of formerly middle class Americans, now
    the neo-poor, have yet to recover from the devastation of 2008. So imagine what things will be like when Wall Street has a meltdown much worse than 2008 and even worse than 1929. Imagine a financial nightmare much worse than The Great Depression. Imagine the violence and civil unrest, the rivers of blood flowing in the streets.

    This is why preppers are prepping and praying. They see the storm clouds on the horizon, and they know that as Gerald Celente says, when people lose everything and have nothing to lose, they lose it. Please say a prayer for The Banana Republic of America because in this Third World horror movie, we need all the help we can get.

    • Avner

      They are exposed to derivatives, but you know they will pass the buck to us and the unholy trinity of the banks, corporations, and politicians will tell us why it’s good for us. If you want your money, go talk to the MRAP on the corner of the bank.

      You know, preppers are prepping and praying, but you what to know something? When this all goes down, if you hedge YOUR cards right you’ll be freer than those who chose to ignore the signs. Yeah, DC is all powerful.. not. They are either all powerful, or irrelevant. If you leave your money in the bank and play in their system, they own you plain and simple. Get your money out, and if you touch it you own it no matter how many microchips they have.. I guess they don’t matter now do they?

      • El Pollo de Oro

        Avner: I can just hear the politicians now. “Yes, the banks are taking 25% of your life savings. But it’s for your own good, and they’re letting you keep the other 75%. By taking a haircut, you will do your part to make our country stronger.”

        • al

          Oro are you a PR rep? hahahaha

          • El Pollo de Oro

            Al: I love it when Gerald Celente says that if the banksters had names like Puccini, Caruso, Riccardi and Mondavi, the presstitutes would call them the mafia. It’s so true. But the White Shoe Boys can rob the country blind with the politicians’ blessing, and their PR hacks will make it sound like they’re doing us a favor. Welcome to Bizzarro Land BRA, where grand theft, robbery and extortion are painted as generosity.

        • Mike Smithy

          Yes. They will call it “Fiscal Patriotism”.

    • Nico

      El Pollo de Oro, although I totally agree with you in your comment I just wish to comment that the phrase ‘Banana Republic’ has been reserved for South Africa only:-) My country has already been totally drained of all its riches while still being run into the ground like there is no tomorrow and the worst part is the financial collapse haven’t even started.

      • El Pollo de Oro

        Nico: I’ve never been to South Africa. But from I know of Johannesburg, it would be funny to drop a bankster off in Hillbrow (minus a bodyguard) at 3 AM and see how he makes out.

  • Drud

    @ Micheal – Like to see your reference to Jim Quinn’s article on JC Penney. Most of your articles get re-posted on TBP, as well. I seem to see a coming together of many different alternative news sites and that is a very good thing in my mind. More than anything we need some solidarity between those of us that are awake and aware of the problems our society–our world–face.

  • Horiboyable .

    Why are most people so stupid? An honest man does not consume more than he produces. Why do people think they can simply vote themselves rich. If you are in debt, your solution is not to borrow more money yet this is what every western nation has done since 2008. It is also immoral, you are stealing from your own children loading their futures with your debt. Government should not be allowed to borrow money.

    • df NJ

      Your argument makes sense if we were on the gold standard for currency. But with fiat currency the rules are different. Look at the works of Stephanie Kelton. She argues the government should be printing money for job creation for exactly the reasons you say we should not be printing money. I cannot defend her positions from my casual reading but her arguments are somewhat convincing.

      • Gay Veteran

        well it would have been different if we had spent $3 TRILLION on American infrastructure instead of our war of aggression against Iraq

        • jakartaman

          Or $4 trillion on trying to make certain minorities functioning civilians.
          How’s the 1 and 1/2 gainer practices comming?

          • Gay Veteran

            I don’t know, how’s your pig f-ing coming? oh, I shouldn’t be asking about your mom

      • Samanthasayso

        Another big government communist is claiming that the government should be printing yet more money for job creation? How typical! That’s what central banks have been doing for the past 6 years and all it has done is create trillions more in debt.

  • autofixer

    Is it safe to say that Keynesian Socialism is a failure?

    • df NJ

      We went from losing 800,000 jobs per month to adding 200,000 jobs per month. It’s not clear that is a failure. By what measure are you considering it to be a failure?

      • Mike Smithy

        The jobs lost were full time living wage jobs, while the added jobs are low wage part time McJobs. I would consider that a failure of epic proportions.

        • df NJ

          I can’t argue with that. But I think the problems have more to do with government policy than Keynesian Socialism. When the Chinese peg the Yuan 6 to 1 against the dollar it means a CEO gets 6 Chinese workers for every one American worker assuming relative equal amounts of supply. Add the 3x population in China and we are totally hosed. Combine this with a complete lack of free markets to wring out inefficiencies the result is extreme unemployment and poverty. The problems of our country are not rocket science. The lobbyists force the politicians to pass laws creating cartels and monopolies in exchange for campaign financing. Take hospital’s for example. The price collusion is causing at least a 3x to 4x amount charged per incident than in other countries. As if we can afford this level of monopoly with our McWages.

          • Gay Veteran

            MILLIONS of American jobs were shipped to China for 2 reasons:
            1. near slave labor wages
            2. NO environmental regulations

          • CharlesH

            Of course. If you look from a business viewpoint, it makes perfectly good business sense. NOT to the U.S. worker but to them.

          • Samanthasayso

            Combine corrupt big government cronyism with big government Keynesian socialism and we are totally hosed. China doesn’t have massive welfare programs and doesn’t have hordes of immigrants from third world countries crossing their open borders like this country does.

      • CharlesH

        Also so many – an inordinate amount of people – now have 2 and even 3 part time jobs to make the equivalent of one full time job. Now – there are ZERO benefits with part time jobs, remember that too. We’re sliding BACKWARDS and fast! How many people are now not in the workforce – either under employed or quite looking – over 93 MILLION – that’s NINETY THREE MILLION WORKING AGE PEOPLE.

    • Mike Smithy

      You speak truth. However, what I mind most interesting is how the influx of millions of illegal aliens have stagnated wages for poor American citizen’s with limited job skills. Despite this fact, these same poor American’s can’t see how Obama’s policies such as amnesty is destroying their future.

  • Mike Smithy

    Despite our dismal economic future,the following should help ease the pain.

    Today’s Stock Market Report:

    Paper was stationary.
    Fluorescent tubing was dimmed in light trading.
    Knives were up sharply.
    Pencils lost a few points.
    Hiking equipment was trailing.
    Elevators rose, while escalators continued their slow decline.
    Light switches were off.
    Mining equipment hit rock bottom.
    Diapers remained unchanged.
    Shipping lines stayed at an even keel.
    Balloon prices were inflated.
    Scott Tissue touched a new bottom.

  • Richard O. Mann

    It’s the end of the world as we know it, and I feel fine.

  • bob m

    we have all become socialist without believing in socialism, printing money

  • jhowell882

    Micheal can you tell us, for those of us not into the world/global financial thing to the nth degree, what should we be looking for that will start the bursting of the bubble and roughly how bad will it get?

    i watch everything and a lot of people both financial, political and those that just watch this closely are all saying this is going to come down big.

    but what should we be looking for that will cause it to fall? world war? economics for regular people or something else?

    just looking for a ball park answer. thanks

  • old fart

    When our economy goes breasts skywards I suspect it will occur very rapid as the ones in the know grab and run leaving the rest of us in the lurch.

  • CharlesH

    Thanks Michael for another awesome commentary. I literally despise the message but have total respect for the messenger!! I’m actually starting to think that maybe – just a tiny tiny maybe – this whole damn circus can keep going on for infinity. Then I wake up. When this thing blows up and it surely will – only GOD Himself knows how bad it’s going to be. Us mere mortals can only speculate. I mean this with all my heart – may God have mercy on all of us.

    • df NJ

      What’s really interesting is you have 7 billion people on the planet. I think the ultra-rich bankers are underestimating the riot potential and capabilities the 7 billion people will have. I think when this thing collapses there will be billions of bolsheviks looking for Romanovs to punish. They think their military and the private security forces will just do their bidding without question. Who knows what will happen. Maybe the members of the military will start taking their oath to the Constitution seriously and start arresting all the members of our government who have dual citizenship with foreign countries. Maybe sanity will prevail. We shall see.

      • CharlesH

        Thanks – you made an interesting point. I’ve thought about what you said and you may very well be correct (hope so). But, like you said, we shall see.

      • GetReal4U2

        sadly…American military leaders have and are being purged out if they disagree with any of obummers policies…

  • Timothy Milhomme

    Try and collect

  • al

    Fantastic article. Actually brings a tear to the eye, how did we get to this!!

  • Joel

    Raaah, Michael, you have said the wrong words “If you can believe it”… wonder where is Richard “I’m The Best”, the Mother Theresa of English correctness, the Mahatma Gandhi of Blog Writing this time… Usually he can not resist that kind of “mistake” from you 🙂

    Now, more seriously a 286% Debt to GDP is an horror movie. When – not IF – we hit the wall, it will be a terrifying moment for the whole planet (whether it happen this September or in 5 years from now, the result is catastrophic)

  • Jim

    Did you know that there is more than $28,000 owed (on average) to every man, woman and child on the entire planet? For everyone owing a dollar, someone is owed a dollar.

  • Jim Clark

    Who in Greece has any money left to confiscate?

  • El Pollo de Oro

    Evil Shadow: Let’s say I’m walking down the street at night, and a thug bops me over my head and steals my wallet. When the cops catch him, he says, “Yes, I bopped him over the head and took his wallet. But this wasn’t a robbery or an assault. I was merely investing his money for him.” Well, that’s the banksters’ mentality. But millions of Americans aren’t going to like the bail-in. All hell is going to break loose, and it will not be pretty.

    • Mike Smithy

      Great analogy. The following is a comparable analogy pursuant to immigration policy: Let’s say a hijacker takes command of a commercial aircraft owned by United. The hijacker claims that he is not a hijacker but an undocumented employee of United Airlines.

  • Ok, so let me get this straight: The entire planet is in debt. Check. This debt, nearly $200 Trillion, will never be paid off. Check.
    Just one question: To whom are we in debt? This is where they lost me.

  • GSOB

    Its the food chain we all depend on that everyone who depends on it should consider. Double base.

  • GetReal4U2

    Get ready…September approaches quickly…God’s timing is very real…please read the “most important thing” article above…time is VERY short…

  • Anthony Neilsen

    This is all because of the corrupt financial system – fiat currency! The debt is not legitimate and should be ignored. Also, there looms one important question: who is owed all of this debt??? Hmmm – and what did these people do to deserve so much money?

  • Anthony Neilsen

    After scanning most of the comments here, I’m sad to say that no-one seems to understand how fiat currency works, or how the Federal Reserve Bank of America operates. This article is a sham in itself for not mentioning any of this.

  • Michael

    Yes, K drain money from the Middle Class as if draining blood from a corpse. Our 4 banks are 350-450% over-leveraged in derivatives, 55% are known to be ‘toxic’.

    America has not much time remaining as the reserve currency for the world. It is all about time and time is running short.

    My advise, but you must act quickly. Look at your living expenses for the past year, set aside the amount of the highest cost for six of those months. Work rapidly to store 6 months of food, remember, you need 1 million calories of food for 1 year x the number of people to be fed. You must be willing to protect your people and their food. The question that remains are you physiologically prepared to do what may be demanded of you.

    If you have the ‘juice’ buy silver and gold, 1 ounce sizings. Purchase about 140 + ounces of silver and several 1 ounce gold bars.
    The silver will work to buy what you need, the Gold will help to keep you out of the ‘camps’.

    Pay off your home or property, buy some alternative currencies, such as Canadian dollars, Singapore dollars, they may work when the US dollar is exhausted. Go liquid, think dollars, yes, you think, what a hypocrite. First I say the dollar is going down and now I tell you to buy dollars. Look you will need something to help get past the first days and months, it may as well be the then hyper-inflated US dollar.

    So use those US dollars first, then your alternative currencies, use the Silver sparingly, remember the Gold is your ticket out of the ‘camps’ or out of this country. Think Singapore.

    So Good Night and Good Luck America…What comes tomorrow will depend on what lies today in the heart of man. Will he rise up and take what is rightfully his or shall he offer up all to this new tyranny. The pages of history await you’re decision.

  • folgers22

    I won’t pretend that I am an expert on economics, so please excuse my rank inexperience when I ask this question: Why does this matter?

    I know we’re all in debt.
    I know debt is bad, tho going into deblt can be useful(i.e. R&D).
    I know most of the debt is in the West and China and is garbage.

    Is not most of this debt run up by the 1% against each other, not the vast majority of us (i.e. derivatives vs consumer spending)? I got a mortgage. You may have one, too. Most of us got those mortgages responsibly to own a home of our own, not like the speculators of the last bubble. Contrast our more-or-less responsible debt acquired via the system controlled by the banks and the govt to the massive, massive debt built by the govt, banks, and big business. A lot of their debt was run up irresponsibly or illegally, flying in the face of basic economics and the law, and only with the permission/protection of the state.

    Here’s why I ask if it matters-Wouldn’t a lot of that debt be safely classified as Odious Debt? (from Wiklipedia:”…odious debt… is a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable.”)
    For instance, the future nation(s) that comprise the current USA will not feel responsible for the 17+ trillion in debt the former USA ran up. I’m never going to feel like I am obligated to pay for Fanny Mae or Lehman or AIG or Bank of America, etc for the same
    reason. Those 2-buck-a-day chumps Michael referenced in his article are never going to feel bound to pay their $28,000 debt.

    When and if the day comes when those debts come due, I guess we’re going to see a global financial collapse and a long, long, long global depression. There is no way we can expect a corporation to actually pay trillions in debts tehy ran up in fantasy money. That money doesn’t exist. It never did and it never will. It never should have been permitted and everyone is going to end up SOL when it comes due. I believe they’ll be forced to just wipe out the debts across the board or accept total collapse. No doubt, they’ll punish everyone equally and seize our bank accounts for the small amount of savings we have, but there’s no way it will cover the losses. I wonder who will ultimately be the winners-those of us who are debt–free or those of us who spend ourselves into ridiculous debt, like the big business crooks and banksters above?

    Ultimately, might these death spasms ultimately lead to a better system?

  • Mondobeyondo

    Everything is falling in place for The Mother of All Financial Calamities to take place. The debt to GDP ratio… the derivatives bubble.. the stock market bubble… the (re-inflating) housing bubble. It all screams “unsustainability”.

    When the floor does fall out, it will be a worldwide event. There will be no escape. Millionaires will become “thousandaires” overnight. And the “young, fabulous and broke”, as Suze Orman would say? Wellll…. good luck.


    Is there game theory for this? So, if Chinese real estate is the first bubble to pop, would the Chinese then flee renminbi for dollars? Euros? Yen?

    Let’s assume dollars. So then the dollar would soar in value, and all of the companies that had been banking on exports from the U.S. would suddenly be underwater on their debt payments for the expansion they needed to export. Gold might drop in value first, for a limited time period. Then, as the U.S. companies started having horrible quarters, the dollar would shake as those seeking safe currencies would seek alternatives to the dollar.

    Somewhere in there, another Saddam Hussein type would start selling oil for Euros or Rubles or something. The obvious choice for that would be Iran, but at this point no one would be surprised even if the Saudis did it.

    I think of the dollar’s reserve currency status as sitting on a scale. Up until 2008, that scale was weighed down heavily in the dollar’s favor. From 2008 to present, there was a lot of weight put on the other side. Remember the meeting of major nations in which the U.S. wasn’t invited that Obama and Clinton crashed? Now, that scale is still weighted towards the dollar, but the weight difference is slight. And then the nature of scales is that if you drop weight on either side, it starts bouncing up and down…..

    Someone else can game this out for yen and rubles

  • BIG

    “If we took everything that the global economy produced this year and everything that the global economy produced next year and used it to pay all of this debt, it still would not be enough”

    Well, you are actually confusing to be… and not very serious…
    Do you know that you can not pay a debt with products or services? Just for fun, try to pay your mortgage to your bank with packs of potatoes, I’m not sure it will work.
    You can only pay a debt with MONEY!

    Do you also know that money is emitted with an interest rate? This means that there is systematically more debt created than money created to cover it. As a consequence, the debt can only increase, whatever the amount of products or services the world produces.

    Therefore, saying that the world needs to work harder and to be more productive in order to pay the debt is just a FRAUD leading people to slavery!

    As long as there is no strong reform of the monetary system (and it already well late to do it), the problem of the global debt will never be solved. This is the ONLY acceptable way. (as, for me, war is not an acceptable way).

  • Tatiana Covington

    Compound interest is a form of positive feedback. “Positive feedback makes any system oscillate out of control.” — Heinlein

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