Wednesday, January 1, 2020

Global Debt Watch: $126.5 Trillion and Counting

Last time I tallied the global outstanding debt was in 2011 using 2010 data. At that point, the number stood at $95.5T. 

I recently updated this tally using mid-2019 data from the Bank of International Settlements (BIS), and the latest number stands at $126.5T, a 32%+ increase. U.S. debt outstanding is over 3x ($42.2T) the next highest debtor, now China, who surpassed Japan in the last two years. This follows significant growth in issuance of U.S. Treasury debt (funding an all-time high in the Federal public debt) and Corporate debt (fueling record levels in the corporate bond market), but also brisk growth in Mortgage and Household debt. China is dealing with its own issue of high debt levels amidst a slowing economy, and the Eurozone is struggling with wildly unpopular negative rates that do little to spur weak economies. 

In the next two articles I discuss the impact of this growing debt and the typical central bank response of greater easing, with a rather reckless disregard for the actual statistics that point to a 16+ year ongoing recession in the U.S. alone. 

“The US Federal debt is not like other debt” is an often-heard quote from those asked what the impact will be from growing U.S. public debt. Like ongoing Fed easing, growing debt has a serious consequence only to be revealed. 

I leave the reader with a set of charts that I prepared from the Federal Reserve Economic Data (FRED) database that specifically show various components of the growth in U.S. debt outstanding over the last several decades, and the trend in interest rates. 

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