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Ten years into this monetary experiment, central banks did create growth…
US Gross Domestic Product (GDP) was about $15 trillion in 2008. Current GDP is about $22 trillion. That’s $7 trillion of economic growth.
Impressive… until you figure the cost of that growth.
Over the same period, the US national debt increased from $10 trillion to $22 trillion.
So, it took $12 trillion of debt to create $7 trillion of economic growth.
The marginal utility of all of this new debt is decreasing And it’s the same story all over the world.
The US economy is so dependent on cheap money, it can’t even handle 2% interest rates (the Fed hiked rates from 2.25% to 2.5% last December and stocks fell 20%).
But Europe is even worse. Europe has negative interest rates. And the European economy is so weak (it grew 0.2% in Q4), it can’t even handle ZERO percent interest rates.
Ten years into this monetary experiment, central banks did create growth…
US Gross Domestic Product (GDP) was about $15 trillion in 2008. Current GDP is about $22 trillion. That’s $7 trillion of economic growth.
Impressive… until you figure the cost of that growth.
Over the same period, the US national debt increased from $10 trillion to $22 trillion.
So, it took $12 trillion of debt to create $7 trillion of economic growth.
The marginal utility of all of this new debt is decreasing And it’s the same story all over the world.
The US economy is so dependent on cheap money, it can’t even handle 2% interest rates (the Fed hiked rates from 2.25% to 2.5% last December and stocks fell 20%).
But Europe is even worse. Europe has negative interest rates. And the European economy is so weak (it grew 0.2% in Q4), it can’t even handle ZERO percent interest rates.