The Global Debt Bomb Is Set to Blow for the Next Recession

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money

For the better part of the last decade, you’ve probably heard the politicians and the media tell you the same thing, over and over again. “We’re on the road to recovery” or “the Great Recession is over.” You gotta love how they call it the “Great Recession,” as if it was as bad as the Great Depression, but they can’t quite bring themselves to call it that.

In a sense though they are correct. Things are marginally better now than they were in 2008. But I say ‘marginally’ with reservations. It’s a little easier to find a job, but they don’t pay as well as they used to. Gas is cheap, but only because the economy is slowing down, and pretty much everything else we need to survive including food, medicine, and shelter, is more expensive. The stock market has recovered over the years, but that has done little to alleviate the financial woes of working class Americans. etc etc.

Unfortunately, this lukewarm recovery has come at a cost. Normally, a recovery doesn’t cost a single dime to society, because a real recovery involves letting the chips fall where they may. Companies go bankrupt, the crooks go to jail, and cuts are made to balance the budget. Once the chaff is cut from the economy, new investments can get the ball rolling again, and everyone has more opportunities. The net balance of society as a whole, is in the black.

We didn’t get that after the last recession. Instead, all of the gains our economy has made over the past 8 years have been paid for with debt, both public and private. Our government’s debt has grown from $9 trillion to $18 trillion since 2007. When private debts are included from both individuals and companies, America is $60 trillion in the hole. Globally, debts grew from $142 trillion to $199 trillion between 2007 and 2015.

Jeez, fake recoveries are expensive.

So what happens to all these debts when our country inevitably runs into another recession? Either the debt bubble will pop, or we will accumulate more debt to sustain another paltry recovery. Now that the markets are looking shaky, and it’s become apparent that we’re about to enter another recession, we will be faced with both of those possibilities. Though in all likelihood, our debts are so massive that they have no more room to grow. We can’t inject anything else into the system without it bursting at the seams. At least, that’s what one economist and central banking insider recently admitted to the Telegraph.

“The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up,” said William White, the Swiss-based chairman of the OECD’s review committee and former chief economist of the Bank for International Settlements (BIS).

“Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief,” he said.

“It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something,” he told The Telegraph on the eve of the World Economic Forum in Davos.

That will be the real breaking point. Somehow, there is this mass illusion that the debts we have will eventually be paid off. Or perhaps, the world knows they won’t be paid off, but we all just keep pretending that they will so the show will go on. At some point however, these debts will become impossible to ignore and unavoidable. At that point, people, governments, and private companies will stop paying them, either by choice or because they can’t afford them.

When that happens, the whole house of cards is going to come crashing down. Considering the fact that all the money and assets in the world amounts to about $241 trillion, and the world’s debt is at around $200 trillion, it’s safe to say that the results will be catastrophic. A significant chunk of the world’s wealth is just going to evaporate. So buckle up, this next recession is going to be a doozy.

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Contributed by Joshua Krause of The Daily Sheeple.

Joshua Krause is a reporter, writer and researcher at The Daily Sheeple. He was born and raised in the Bay Area and is a freelance writer and author. You can follow Joshua’s reports at Facebook or on his personal Twitter. Joshua’s website is Strange Danger .

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  • breakawaymotorsports .

    Federal,state and local taxes are the only thing that has gone UP in the last 8 years.Giving $500/month to the town just to live on my property is insane..but what can you do besides move to where the tax liability is not as great?Real estate taxes are out of control along with insurance and electricity rates. Pretty soon I will be living in a motor home if this keeps up.

    • sunshine

      My God, where do you live that you pay $500 a MONTH in property taxes? That’s awful! At least here we don’t have a state income tax, and if you live in one of the poorer/smaller counties they don’t tax you too badly. But we need things like hurricane and flood insurance which is expensive. Seems like you can’t get ahead anywhere, heck, forget getting ahead, you can’t even survive! Of course, it’s by design.

      • breakawaymotorsports .

        Don’t laugh at me: Taxachusetts. We have State income taxes..sales taxes..licenses,fees,fines,permits..it’s just take take take by those who want to spend spend spend, and I live in a small town (2k residents) far away from Boss-town and still the real estate taxes on my very humble house are $500/month.One of the main expenses is the taxpayer subsidized day care that the govt calls education.Even though we only send 5% of the kids to the regional school, our town has to fork over 20% of the operating costs.It has been challenged at the state level in court and denied. If I didn’t have an established business here I would have moved years ago..but I am planning on leaving in the next year or two at the latest. I’d rather live in a teepee than stay here for retirement!

        • FollowDaMoney

          We pay $133 a month on our rural estate. Top secret location.

          • breakawaymotorsports .

            I’ve found a few places to look into where the same setup I have currently is less than 1/4 the expense (not that hard to find less taxes than here..) and the weather will be better. I honestly don’t know why people are so proud of living in the Commiewealth as the cost of living here is outrageous and the weather stinks for 6 months of the year. 58 years..and I’ve had enough..

          • FollowDaMoney

            I packed my bags and left Illinois 25 years ago. Never regretted it. The saying goes “Move to where you want to live and then find something to do” Very glad that the Liberals haven’t figured out where fly-over country is located and that it beats the crap out of living on the East or West coast. 360 days a year I can travel 70 miles in all directions is less than 70 minutes. The other 5 days the roads may be ice covered. We get about 10 months good to great weather, but we also get to enjoy the seasons. I would hate to live where is warm, hot, and hotter. Good luck in finding your dream….

        • sunshine

          Wow! I figured it was in the Northeast somewhere. Seems like Taxachusetts isn’t just a clever name! I’ve never been, due to y’alls very strict gun control and refusal to allow reciprocity with my state for concealed carry, which is too bad because I’d like to see it. Not Boston though, I never could care less about any city anywhere. I have done a bit of reading about it though (I am a nerd and my entertainment is reading about places and countries lol) and are you in Western Mass?

          Not trying to be nosy but it’s interesting how different it is said to be over there. Poor and rural…probably poor if you guys are paying those taxes! Is your business taxed to death too? Don’t feel too bad about that, the lady that does my hair was complaining about how different it was to open her current hair salon vs the one she started 30 years ago. So it’s everywhere, unfortunately. But yeah, I’d recommend when you leave, come down South. Just don’t be the kind of Yankee we all hate (loud, rude, pushy, thinks we’re all cousin effing hicks, trying to turn the place into a copy of where you left…lol but you don’t seem like that)! Good luck, seriously.

          • breakawaymotorsports .

            Central state..not really a poor area..just not enough people to tax out here..so they beat up on the few…and I hear you on cities. I haven’t been to Boss-town in over 35 years..nothing there that interests me. I am a gun guy..luckily bought mine before all the draconian laws went into effect and our town is very gun friendly (including the Chief of police) I’m looking in the southwest..and no..I’m not your typical arrogant swamp Yankee. I really don’t fit in well with all the libbies that populate this area. I was born here..but i’m sure as hell NOT going to die here!

          • sunshine

            That is good that you have your guns and live in a gun friendly area. Are you allowed to hunt up there at all? I’ve never been to the Southwest (no further west than San Antonio) but I like the lack of humidity and constant sunshine. It is so humid in the South sometimes it’s just too much!

            I understand about being born somewhere and not fitting in. I’m a DC area native (well, I was born there and one side of my family is from there, actual natives going way back) and I’d say the area has changed so much. I can remember it being very and distinctly Southern, then it changed with the influx of Yankees and other people, and all the natives moved further West to the mountains or down South towards Fredericksburg. Now it’s like NY/NJ South and it’s awful, they are hell bent on eradicating our Confederate heritage and they don’t care for our history and landmarks at all (not just CSA stuff, but all of it). Such a shame.

    • FollowDaMoney

      Think Tiny House. Barry’s brother lives in one called a “Shack”.

  • Anothereno

    Governments are taking more and more of our money, some of their agency’s have groups to find ways to ding us for more to increase their budgets, things don’t get better they just spend more and more and drive up the deficit…

    Nothing short of a revolution will fix this, presidents have tried and been murdered, it all comes down to privatized banking system, every dollar printed has interest, it’s lent to us with more interest to cover that cost and making everything more expensive, no country will ever truly prosper until the system is fixed…. Nothing short of a revolution can fix it…..

    Each and every person out there has to decide if they want feed the bankers, barter, trade, save up to buy stuff don’t get it on credit, do as much as you can without touching the banking system, it’s the only way to fight it.

  • Meltonmark

    But to whom is this money owed? A nation cannot go bankrupt. It’s currency can become worthless, yes, but isn’t that the intention? If the government of the US or the UK can borrow at 2% and push inflation to 2%+ then YOU are paying the interest and the government is still better off.

  • ron17571

    I once read an article that claimed we were in a depression and that the steadily increasing debt was what shielded people from feeling it’s effects.
    The piper has be paid eventually. I do laugh when the media claims that we may have another recession.

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