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Debt ratio to GDP

For discussions of events and conditions not necessarily related to Peak Oil.

Debt ratio to GDP

Unread postby onlooker » Fri 08 May 2015, 06:52:55

http://www.mckinsey.com/insights/econom ... leveraging
The above mentioned link talks of one of the inter-related structural deficiencies in our whole economic edifice. In a post peak oil world how can our credit based economic systems continue to function? If debt is so ubiquitous in the world, how can it be maintained and perpetuated in a world of shrinking primary energy resulting in contracting economies. The answer is it cannot. The whole notion of lending is based on the inherent faith in being paid back and with interest. So, in shrinking economies that faith will be shattered. When that faith is shattered then that itself will reduce economic activity vis-a-vis the halt in lending. The lack of liquidity will be like an express train into insolvency and deflation. So-called quantum easing seems to me to be the chosen weapon to fore-stall this massive disturbance. It obviously will fail because money cannot replace energy or economic production and activity. By the way we already are seeing it's (QE) limitations not to mention it's danger of causing inflation. At some point like all the bubbles and ponzi like activity inherent in our economic machinations, the bubble will burst and the game will be over.
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Re: Debt ratio to GDP

Unread postby zoidberg » Fri 08 May 2015, 18:35:31

The game changes but does not end regardless of the value of the commodity we call money.

But things are coming to a head no doubt but it's the end of a phase not everything.

One of the problems is a lack of profitable investments. Another is a lack of demand.Another is the use of debt as money the destruction of which destroying money faster than it is created and propagated.

What this all adds up to is anyone's guess.truth is no one not from the top to the bottom is able to predict outcomes or timing very well.

Another example of models not modeling reality because of assumptions programmed into them. Everyone is very convincing and convinced regardless.
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