In the long term, this is neither healthy nor sustainable. We estimate that amounts to approximately $25tn of government debt in the major regions of the global economy.Īs the Fed reported in its 2018 survey, every major asset class over the 20 years from 1997 through to 2018 grew on average at an annual pace faster than nominal GDP. With a new US administration, and the end of the Covid battle in sight with the vaccination rollout under way, now is a good time for the major economies of the west (and ideally the world) to sit down and devise a new international monetary order.Īs part of that there should be widespread debt cancellation, especially the government debt held by central banks. Solving it should contribute significantly to healing divisions in western societies. This is also, of course, one of the factors sitting at the heart of today’s inequality and generational divide.
#CAPITALISM II TUTORIAL BROKEN DRIVER#
Rather than a shortage of housing supply, as is often postulated as the key reason for high house prices, it’s the abundant and rapid growth in mortgage debt that has been the key driver in recent decades. The massive growth of mortgage debt across most of the world’s major economies is one key example of this. That process has been aided and abetted by global regulators and central banks that have largely ignored monetary targets and money supply growth. These include the unending liquidity that has been created by the commercial and central banks under this anchorless international monetary system.
#CAPITALISM II TUTORIAL BROKEN DRIVERS#
This system has now reached the end of its usefulness.Īn understanding of the drivers of the 30-year debt supercycle illustrates the system’s tiredness. When that broke down at the start of the 1970s, the world moved on to a fiat system where the dollar was not backed by a commodity, and was therefore not anchored.
0 kommentar(er)
