Personal view: our debt addiction continues unabated
Posted 9.26.16Dennis Terez, current executive MBA candidate, reflects on the global economy's addiction to debt.
by Dennis G. Terez, executive MBA candidate
Our global economy is addicted to debt. The addiction is so bad that the drug pushers (savers and investors) are willing to pay the addict (governments) to use the drug.
That's really what negative interest rates are like. Depositors are paying a bank to hold their money rather than the other way around. Negative interest rates are catching hold. Early last year, about $7 trillion of government debt in the Eurozone, Switzerland and Japan was tied up in negative yields. That amount last year was already more than a third the size of the U.S. national debt. And the number keeps growing.
The addiction to debt is of epidemic proportions. Since our last global financial crisis in 2008, private and public debt in the world's leading economies has increased to more than $200 trillion, or about 300% of the world's gross domestic product. In other words, take the value of the world's goods and services, triple it, and you would only break even. That's a lot of debt.