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:

 

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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.

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.

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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.

 

http://www.mauldineconomics.com/frontlinethoughts/the-debt-train-will-crash

 

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