zaterdag 2 maart 2013

Total Credit Market Debt

Since 2008 we have started a new era. We entered the period of deleveraging. For more than half a decade we had an exponential growth system in credit, but we have ended this period. I will show you by analyzing "Total Credit Market Debt".

Total Credit Market Debt today, is at an astonishingly $55.3 trillion dollars.
Chart 1: Total Credit Market Debt Owed
And it is 350% of GDP.
Chart 2: Total Credit Market Debt as a Percentage of GDP
The total credit market debt = federal/state/local government debt + federal debt to trust funds + business debt + household debt + domestic financial sector debt.

This total credit market debt can be divided by federal debt and private debt.

1) Federal debt: $16.7 trillion.

Chart 3: Federal Debt: Total Public Debt
Federal debt is at 100% of GDP.

Chart 4: Federal Debt: Total Public Debt as a % of GDP
2) Private debt: $40 trillion.
Chart 5: Private Debt
Private debt is at 245% of GDP.

Chart 6: Private Debt as a percentage of GDP
As you can see, since 2008, the private sector has been deleveraging (Chart 6) and the Federal Reserve has been preventing this to happen (Chart 4).

But overall, the Federal Reserve hasn't printed enough money to keep debt going up exponentially (Chart 1).

So what happens when debt doesn't grow exponentially? You will get an economic collapse as Chris Martenson explains here.

To read the analysis: go here.

4 opmerkingen:

  1. Thanks so much for your great analysis. It is scary to think of what happens to the debt when interest rates go up.

    1. Yes, total credit market debt has not been a problem lately because interest rates are so low. But one day, this enormous federal government debt growth will push bond yields higher, because investors will see the risk of a growing public debt.

  2. does this include the FED balance sheets ? as we know tit moved to 4 trillions in a few years, we cannot do any calculations if we do not include central banks balance sheets too

    1. I'm pretty sure it includes the Fed balance sheet. Because GFDEBTN is included and that's the 17 trillion in debt of the Fed. That debt is existent because the fed printed those 4 trillion to buy treasuries and that's included in the 17 trillion in debt.