“It’s the end of the supercycle. It’s the end of the great debt cycle.” –Ray Dalio

Over the weekend, I sat down with Stig and Preston of The Investors Podcast. One of the questions they asked me was, “what are the three biggest risks you see right now?” I responded:

1. The Chinese Debt Bubble
2. The Bank of Japan’s Extremely Aggressive Monetary Policies
3. The US Corporate Debt Bubble

All three of these things now have something rather glaring in common: They have all stopped working.

In the case of the Chinese Debt Bubble, we have seen a renewed surge in the amount of debt being created with very little or no effect on the economy. Note the divergence recently between growth in bank credit and M2:

Chart via Business Insider

With the Bank of Japan, they have been massively increasing the monetary base in order to weaken the yen. These efforts have recently failed to accomplish their goal:

Chart via Bloomberg

Finally, US corporations have been further increasing their already massive debt load in recent years. The trouble is it now appears this has not resulted in any sort of commensurate economic increase:

Chart via Financial Times