The Global Billionaire Population Has Doubled In Five Years Thanks To Bubbles

Knight Frank’s latest annual Wealth Report just came out and is full of interesting data. What stood out to me, in particular, is the statistic that showed that the global billionaire population has approximately doubled since 2013, so I decided to chart it. In 2013, there were 1,140 billionaires around the world, there were 2,229 billionaires in 2018, and an expected 2,311 billionaires in 2019.

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Though many people take these statistics at face value and think “the world is growing richer! There is so much wealth being created!,” I am very concerned due to my belief that this wealth surge is the result of a gigantic global credit and asset bubble that has been inflated by central banks in the past decade. I explained my views in a recent piece called “Asset Bubbles Are Making Davos Billionaires Richer.” 

One example of this phenomenon is how U.S. household wealth recently hit a record of 535% of the GDP, while the historic average since 1952 is just 384%. When household wealth reaches an extreme relative to the underlying economy or GDP (as it did in the prior two bubbles), a sharp correction is inevitable. Though I used the U.S. as an example, similar trends are occurring around the world due to record low interest rates and massive amounts of liquidity created by central banks in the past decade.

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Global interest rates have been at 5,000-year lows for much of the past decade, which is one of the main contributors to the global asset bubble that has created so many new billionaires (low interest rates lead to higher asset prices).

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Enabled by ultra-low interest rates, global debt has surged by nearly $150 trillion since 2003 and $70 trillion since 2008. As bad as the 2008 global financial crisis was, the next crisis will hit the global economy even harder simply due to the fact that an additional $70+ trillion in debt has been added. 

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