Hey Jesseconomists
I recently read an article stating that the world now requires $103 Trillion of new credit to function, while the see numbers may seem like random statements since we've become so desensitised to the idea of a billion and a trillion. Soon we won't even flinch at the idea of Quintilian I'd like to try and put it into perspective for you.
Current world debt sits around $258 trillion, so adding another 103 would take is up to $361 Trillion. When you consider the fact that Global GDP is only 81 Trillion per year, that would mean we'll be moving up form a 331% debt to GDP ratio to 445%.
I read some study I can't remember where I know Lyn Alden quoted it in a podcast recently on What Bitcoin Did, I think, and she mentioned that no countries fiat currency has survived after hitting 130% Debt to GDP, yes it took time to die even when it hit those rations, however, there was no coming back, is the main point.
Who is at a tipping point
If we take a look at the countries that have borrowed over their eyeballs and way beyond it paints quite the startling picture, as its a mix of nations from developed to developing and apart from the US non of them can create their own currency without borrowing USD and selling bonds.
I'm not exactly sure where this data comes from as the site doesn't provide sources, I've linked to it below the table, but this is what I could find on debt to GDP of countries.
I have to assume its total debt of the country including household, corporate and government since this Wikipedia article on government debt to GDP tells another story.
| Country | Debt | % of GDP | Per Capita |
|---|---|---|---|
| Malta | 96.25 Bn | 879.00% | 223,000 |
| Cyprus | 119.67 Bn | 597.00% | 97,200 |
| Singapore | 1.32 Tn | 453.00% | 231,000 |
| United Kingdom | 8.48 Tn | 313.00% | 127,000 |
| Switzerland | 1.82 Tn | 269.00% | 213,100 |
| Belgium | 1.28 Tn | 265.00% | 112,000 |
| Monaco | 16.50 Bn | 240.00% | 434,000 |
| Greece | 477.00 Bn | 228.00% | 42,800 |
| Portugal | 447.02 Bn | 216.00% | 43,300 |
| France | 5.69 Tn | 213.00% | 87,200 |
| Finland | 483.37 Bn | 196.00% | 87,500 |
| Bahamas | 17.56 Bn | 194.00% | 44,200 |
| Mongolia | 25.21 Bn | 186.00% | 7,800 |
| Seychelles | 2.55 Bn | 180.00% | 26,200 |
| Sweden | 993.94 Bn | 177.00% | 94,500 |
| Norway | 604.42 Bn | 169.00% | 117,000 |
| Austria | 638.34 Bn | 167.00% | 73,100 |
| Spain | 2.26 Tn | 167.00% | 48,700 |
| Puerto Rico | 167.40 Bn | 164.00% | 47,800 |
| Denmark | 491.62 Bn | 163.00% | 85,700 |
| Latvia | 41.15 Bn | 147.00% | 21,200 |
| Germany | 5.40 Tn | 141.00% | 65,600 |
| Australia | 1.49 Tn | 126.00% | 60,800 |
| Italy | 2.51 Tn | 124.00% | 42,300 |
| Jamaica | 16.76 Bn | 122.00% | 6,000 |
Stats according to: worldpopulationreview.com
We're pushing the limits
Since I've never lived through hyperinflation myself I can only read up about it and assume that things could turn out similar, but I mean if these numbers are correct then this system of money we have is pretty robust, you can seriously abuse it, and it will keep going.
Yes there's an insane wealth divide, and so many left poor, resources are misused and all that I normally complain about but damn, you really have to take your hat off to the fact that as far as we pushed this thing, it just keeps on chucking along without breaking.
A part of me thinks that it's more psychological than it is mathematical and peoples blind faith in the system and belief in fiat keeps this game of hot potato and musical chairs going. No developed nation thinks they are going to turn into a failed state; there's plenty of states that need to fail first before it gets there.
Who will be first to chicken out
However, 2020 has sure as shit sped up that process and we're going to see states fail, default, or hyperinflate their currencies in the next 10 years. In the game of debt, there are winners and losers, and while I don't know who is the worst bag holder, someone is going to be stuck with the bags in this pump and dump.
Even if countries do deleverage debt and move to a CBDC, they'll be sitting with so many currency units that are unproductive that inflation on the supply of goods and services is inevitable.
At this point, I think we will have to look at scarce assets like Gold, Silver and Bitcoin to be the truth and the price signals we base everything on. Fiat isn't going anywhere anytime soon, but it sure is going to be in some state of flux and who knows what each national currency will do, if they will die and how much-compounded value they will lose over the next 10 years.
Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."
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