Saturday, July 21, 2018

GDP: Global Debt Ponzi.

GDP stands for Global Debt Ponzi.  The world bought its way into higher production using debt.  At first, $1 of debt bought $2+ of GDP and so debt based growth looked like a real miracle, but over time (i.e. once everyone is into the act) additional debt finally becomes a net negative relative to new GDP is buys.  Jim Rickards puts it like this:



During the boom years of the 1950s and 1960s, every dollar of debt that was created, we got $2.41 worth of economic growth.

So that was pretty good bang for the buck.

But by the “stagflation” of the late 1970s that relationship had actually collapsed.

So now for a dollar of debt in the late 1970s, we were only getting $.41 in growth, so, obviously, that’s a huge drop-off.

Description: economic growth vs great economic depression

So we’re piling on the debt, but we’re getting less and less growth.

You know what that number is today? Today, we only get $.03 in growth for every $1 of debt.


So we’re piling on the debt, but we’re getting less and less growth.

As the trend goes from $2.41 to $.41 to $.03…

It’s soon going to go negative.



When additional debt actually results in negative returns, the debt:GDP numbers skyrocket because the debt is an exponential function (even at only 2% interest, it’s still exponential) and GDP is not.  At that point any thinking person can see that there will certainly be a global economic reset as everyone figures out that the whole thing is one big Madoffian lie based on fake money.  It used to be I was the only one saying this. 

Now the main stream analysts like Mauldin are saying it too.



There is still time to prepare.  Paper assets will not be your friend during this time.

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