Top World Financial Agencies Say $223 Trillion World Debt Could Trigger a Crisis

So all the hemming and hawing from the Fed about when they are going to raise interest rates is just that. According to Peter Schiff, they are blowing a lot of hot air, and have no intention to raise rates, as indicated by Janet Yellen’s vague statements stating that it would be an “indefinite” period of time before they would raise rates. 

But time will tell. Many thought they wouldn’t taper, or will now do it covertly. QE (money printing)  is scheduled to stop at the end of this month.  Let the games begin…

“Contrary to widely held beliefs, the world has not yet begun to de-lever and the global debt to GDP ratio is still growing, breaking new highs.”

The $223.3 trillion in total global debt is 303% of world GDP.  As the Telegraph puts it:
 

The Bank for International Settlements has been warning for years that the U.S. and other Western countries have been using all of the wrong approaches to fix the economy. Instead of helping to reduce unemployment, bad government policy has made it much worse. 

Excessive leverage was one of the main causes of the 2007-2008 crisis … and yet governments responded by encouraging more leverage.

Bad government policy has driven the entire world into debt. Instead of fixing any of the real problems which led to the 2007 crisis – governments on both sides of the Atlantic have simply tried to paper over them.   It’s pretty clear how this movie is going to end …
 

The amount of debt globally has soared since the first signs of the financial crisis as governments borrowed to pull their economies out of recession and companies took advantage of record low interest rates, according to the Bank for International Settlements.

Has all that money gone to stimulate the economy? No,  literally none of it has.  Instead, governments chose big banks over their own people.  

The huge amount of debt was racked up to bail out the big banks, and now the money sits in their coffers. Central banks have been engaged in the the “greatest backdoor bailout of all time.”

And yet – as Bloomberg notes – everyone else gets austerity:

Concerned that high debt loads would cause international investors to avoid their markets, many nations resorted to austerity measures of reduced spending and increased taxes, reining in their economies in the process as they tried to restore the fiscal order they abandoned to fight the worldwide recession.

In essence, the elite financial players are manipulating the game so that they get the stimulus … and the little guy gets the austerity.

Indeed, the IMF is recommending “financial repression” of the average person, to plug the giant debt holes created by the bank bailouts.

But didn’t we have to do this to save the economy after Lehman crashed?

Nope … top economists say we should instead of done what Iceland did:  let the big banks go bust, and use resources instead to help the people.

Proof can be found in the fact that throwing money at the big banks has led to a  “jobless recovery” – a permanent destruction of jobs – which is a redistribution of wealth from the little guy to the big boys. 

Indeed, everything the government has been doing since 2008 has made unemployment much worse. 

The total US debt market is close to $60 trillion.  So the US alone is a big chunk of the $223 trillion in total global debt outstanding.  Central banks at this point are stuck in a rut.  For large economies like the US and Japan, having interest rates rise is simply unacceptable given the massive amount of debt carried by these countries, which would drive up their interest payments on the debt.  

Even at this historically low level our interest payments are well above $400 billion per year. Even if rates went up to historically low levels of say 5 percent, this would bring annual debt servicing close to $1 trillion.

So all the hemming and hawing from the Fed about when they are going to raise interest rates is just that. According to Peter Schiff, they are blowing a lot of hot air, and have no intention to raise rates, as indicated by Janet Yellen’s vague statements stating that it would be an “indefinite” period of time before they would raise rates. 

But time will tell. Many thought they wouldn’t taper, or will now do it covertly. QE (money printing)  is scheduled to stop at the end of this month.  Let the games begin…