On Debt as a % of GDP; "Nothing can grow forever"

"The Fed is busy doing everything in its considerable power to get credit (that is, debt) growing again so that we can get back to what it considers to be "normal."  But the problem is – or the predicament, I should more accurately say – is that the recent past was not normal.  ...Somewhere right around 1980, things really changed, and debt began climbing far faster than GDP.

It is simply not possible to grow your debts faster than your income forever.

Total Credit Market Debt (TCMD) is a measure of all the various forms of debt in the U.S. That includes corporate, state, federal, and household borrowing. So student loans are in there, as are auto loans, mortgages, and municipal and federal debt. It's pretty much everything debt-related.

What it does not include, though, are any unfunded obligations, entitlements, or other types of liabilities. So the Social Security shortfalls are not in there, nor are the underfunded pensions at the state or corporate levels."

...a huge number of financial firms and political careers will melt away if/when that credit expansion finally stops.  ...And stop it will; that's just a mathematical certainty. "



http://www.peakprosperity.com/blog/83361/fed-can-only-fail

"Between 1980 and 2013, total credit grew by an astonishing 8% per year, compounded.

So let's run the math experiment as ask what will happen if the Fed is successful and total credit grows for the next 30 years at exactly the same rate it did over the prior 30.

What happens...; It mushrooms into a silly number: $573 trillion. That is, an 8% growth paradigm gives us a tenfold increase in total credit in just thirty years:"

"...can you think of anything that could support borrowing that much money?

...If dollars were to lose 90% or more of their value (say, perhaps due to our central bank creating too many of them?), then it's entirely possible to achieve any sorts of fantastical numbers one wishes to see.

For the Fed to achieve anything even close to the historical rate of credit growth, the dollar will have to lose a lot of value."

http://www.peakprosperity.com/blog/83361/fed-can-only-fail