The Fonzie-Ponzi Theory Of Government Debt

Now here’s the data:

fonzie-ponzi 3

The chart shows the IMF’s projected 2018 public debt ratios for the ten largest advanced economies, ordered from highest to lowest GDP. It shows three economies in the transition range and one full Ponzi, and these include the two largest economies and three of the largest six. Meanwhile, private debt has grown nearly as fast as public debt on a global basis. The Bank for International Settlements compiled data showing global borrowing by households and corporations jumping from 126% of global GDP in 1999 to 151% in 2008 and 159% at the end of 2017. That growth in the private debt burden—33% of GDP so far this millennium—has to eventually stall or reverse. Soaring private debt makes it even more important to heed the Ponzi point for public debt.

 

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