Take this illustration from it:
As far as Australia is concerned, our debt government debt level is apparently at 41% of GDP, which (assuming debt is not a good thing) sounds pretty healthy.
And what about this chart:
As for us:
Australia is a notch ahead of the US, with a corporate debt-to-GDP ratio of 74.7%.As far as I can tell, the problem is that no one really understands the economics of debt on a global scale.
The thing Australia is "bad" at is household debt to GDP: we rank near the top at about 120%, whereas the US is about 75% and China 52%. But having a really low level is not a sign of a country you would like to live in:
So, all rather confusing as to what it means, really...
3 comments:
Steve Keen points out that in the US personal debt fell during World War II which was extraordinary. What happened is that with price controls an rationing there was not a great deal to spend your money on. So everyone was getting paid but you couldn't spend much. So private debt, which had been strangling the economy in the 30's, was severely reduced. When the lads came home no-one was in hock any more so you had two decades of extraordinary progress.
But Keen falls into the side of economics which never sees government debt they don't like. He understands the toxic effect of private debt better than anyone. But Keen still loves the government stuff. The other group of economists never see private debt they don't like. Sinclair is like this. If you fall out of these two groups you will be run out of the profession or undermined in some way. In reality all interest is deadweight loss and both types of debt are absolutely toxic.
See all those great businesses that were started out of Dads shed back in the late 70's and early 80's? That happens very infrequently any more because people are in hock and the banks are misallocating all the loanable funds for the purposes of wealth destruction.
Now it may be that we cannot do without debt and interest but we have to conspire to reduce them as much as possible. The key plank is to get rid of taxes on retained earnings for the sole trader. So that interest is no longer a tax deduction and people can develop their business without recourse to as much debt. Plus their retained earnings in the business can become their chief form of savings, rather than saving at the bank.
The next thing to do is get rid of fractional reserve banking and start forcing bankers to only loan for producer goods and business renovation. Of course government debt is bad. It means you have interest payments that support parasitrd everywhere and you don't have that spending for other things. Plus when you go into that debt thats not bringing resources forward from the community. So you start a cycle of impoverishment. People treat these resources as if it were delivered from a spaceship but the resources for the extra spending comes out of the economy. Its another form of taxation but its double taxation because you then have debt payments to make. Your tax revenues will drop the year to attempt to run big debts.
The delusion that borrowing can help an economy is merely a feature of GDP calculation. If you used Gross domestic revenue instead the impoverishment that debt creates would become more clear. But with the Americans if they used honest GDP figures they would see that they have been in recession since they lost the surpluses of the Clinton era.
So the Americans got down to private 30% debt to GDP BY ACCIDENT during the war. They weren't even in the war for very long. We can do a lot better if we have real intention. That is what we should do. End this centuries long tyranny.
If you support government debt, and policies which create lots of private debt, you are supporting legions of dynastic parasites, never having to work in their life and leeching off the rest of us. You are supporting a huge parasitical finance industry crowding out the rest of the economy.
When you get inflation the bankers have so much more business to work with. This takes wealth off the productive and puts it where the leaches are. We can see this even regionally. So you had the 19th Century industrial revolution. Huge industrial wealth was created either side of the Scottish border. Then you had World War I. All the wealth went right back down south and to London. So the regions that had created all that wealth were looted by the war-time inflation.
I will say that there is a difference between the Japanese and Chinese debts and the American ones. The American debts are qualitatively worse. The Japanese mostly owe their debt to their own central bank. Hence that bank debt could be forgiven. This may ultimately be the case with their corporate debt too. They could more easily arrange a jubilee of some sort. A lot of their debt has come from investing overseas to devalue their currencies so their debts are more easily serviceable.
The Chinese debt is mostly by and too state owned enterprises. State owned banks. Its a huge difference if your government is the usurer rather than Rothschild. That makes it a lot less horrific. After all in that case usury becomes another form of government revenue. Thats a pretty good argument for socialist credit right there. Social credit advocates will be feeling quite vindicated at this stage.
There is no case every for government deficits through carelessness in budgeting. However there may be a case for the government to help reduce private debt. Private debt being such a menace. If they went into deficit reducing private debt, with an essentially sound and otherwise surplus budget, some good may be achieved.
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