I had been looking for this number for a while:
The Organisation for Economic Co-Operation and Development estimates that gross government debt issuance for its member countries will stabilize at about $16 trillion this year, similar to 2009. That compares to gross debt issuance of $12 trillion in 2008 and $9 trillion in 2007.
OECD countries generate $40 trillion GDP a year, so there are raising or rolling over 40% of their GDP a year.
Turn on the printing press!
How much debt can a country assume before it is pushed over the edge? It’s not a simple formula and varies from situation to situation. That said, there are levels at which the risk of a default rises significantly: when Brazil defaulted in 1999, it had debt as a percentage of GDP of 50%, Argentina had 55% at the time of its default in 2001 and Russia had 75% when it defaulted in 1998. These numbers are easily exceeded by a number of heavily indebted countries in Europe today. Hungary’s debt is 78% of GDP, Italy’s is 114%, Estonia has 124% and Greece has 125%.
I don’t think the question really is what is gold worth but what are currencies not worth,” McGuire, 43, said yesterday. “Consider the tremendous fiscal excess that major governments have made to prevent the world economy from collapsing,” he said. Owning gold today is “financial insurance,” he said.
I agree with Chris Martenson when he says that the switch from deflation to inflation will be sudden and driven by social snowballing effects, independently from what will trigger it.
But it could be sooner than that. Or later. The point here is that we really don’t know and because our monetary system operates on faith, it means that we have to be prepared for the fact that a shift could happen at any time. Nobody can predict when a school of fish will suddenly turn to the left. Who knows what final trigger will cause a critical minority to suddenly determine that they’d rather hold things than paper?
It is more about the structure of system than contingent causes and effects and guessing the tipping point trigger: $800 billion sitting in banks’ excess reserves or unsustainable government debt issuance synchronized for every country on earth, add massive systemic risk to the global economy.
The structure of the financial system just added more feedback loops that are ready to be triggered and unleash their effects in avalanche patterns.
