Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Global Debt Growing Three Times Faster than Global Wealth

  by    0   0

Global wealth increased to a new record of $280 trillion in 2017, according to Credit Suisse Global Wealth Report 2017. That seems like pretty good news until you consider global debt is increasing nearly three times as fast.

According to the Wealth Report, total global wealth rose at a rate of 6.4%, the fastest pace since 2012 and reached USD 280 trillion, a gain of USD 16.7 trillion. This reflected widespread gains in equity markets matched by similar rises in non-financial assets, which moved above the pre-crisis year 2007’s level for the first time this year. Wealth growth also outpaced population growth, so that global mean wealth per adult grew by 4.9% and reached a new record high of USD 56,540 per adult.”

Increasing global wealth is one of the trends the World Gold Council identifies as a positive for the gold market in the next year.

That’s all well and good. But we have to also look at the other side of the equation.

As ZeroHedge reported, the Institute of International Finance recently released its latest global debt analysis. It reported that global debt rose to a record $233 trillion at the end of Q3 2017. That is split up between $63 trillion in government debt, $58 trillion in financial sector corporate debt, $68 trillion in non-financial sector corporate debt, and $44 trillion in household indebtedness.

In just nine months, there was an increase of $16 trillion in worldwide debt.

According to the IIF, private non-financial sector debt hit all-time highs in Canada, France, Hong Kong, South Korea, Switzerland and Turkey.

Last summer, US Global Investors CEO Frank Holmes called global debt “the mother of all bubbles.” We also had a report from the Bank of International Settlements saying worldwide debt may actually be understated by $13 trillion.

Of course, all of this debt has ramifications. ZeroHedge put it this way.

Still, while global GDP has enjoyed a period of accelerating growth, this may soon come to an end even as debt levels continue to rise. Meanwhile, the debt pile could act as a brake on central banks trying to raise interest rates, given worries about the debt servicing capacity of highly indebted firms and government, the IIF analysts wrote.”

The mainstream loves to focus on assets and wealth growth, but it doesn’t talk much about debt. They should because they are both important factors in the equation.

Net wealth = Assets – Debt

So, you really can’t talk about wealth without talking about debt. SRSrocco took a look at both factors in the equation.

Even if global wealth surged in 2017, so did world debt.  According to the data, global wealth increased by $16.7 trillion in 2017 while global debt expanded $16 trillion… nearly one to one. However, this is only part of the story. If we look at the increase in total world debt and total global wealth over the past 20 years, we can see a troubling sign, indeed: Since 1997, total global debt increased from $50 trillion to $233 trillion compared to the rise in global wealth from $120 trillion to $280 trillion.

When you do the math, you find global debt has increased 366% vs. 133% increase in global wealth since 1997. That means net wealth was $70 trillion in 1997 versus $47 trillion in 2017.

Think of this in terms of an individual. Say I go out and borrow $75,000 to buy a sports car. Then I borrow $1 million to purchase a beautiful home. I put $60,000 on a credit card to furnish my new house. If you come visit, you will probably think I’m doing pretty well. You’ll see all of those assets and assume I’m sitting pretty.

But I’m not.

It’s a house of cards. I’m more than $1 million in debt. One small economic hiccup will ruin me. It’s a false prosperity built on credit. That’s where the world is right now. And it’s just a matter of time before that economic hiccup sends the whole thing tumbling down.

WhyBuyGoldNowBanner.070815.590

Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Investors Fleeing Housing Market as Bubble Deflates

In another bad sign for a housing bubble that is quickly deflating, investor purchases of single-family homes tanked in the third quarter. Meanwhile, overall home sales continue to tumble and prices are falling.

READ MORE →

Consumer Confidence Declines for Second Straight Month

The powers that be keep telling you that the economy is fine and inflation has likely peaked. But you’re not buying the story. Consumer confidence fell for the second straight month in November as worries about inflation and the trajectory of the economy persist.

READ MORE →

Recession Warning: US Small Businesses Struggling to Pay Rent

In another sign of a struggling economy, small businesses are having an increasingly hard time paying rent. According to Alignable’s November Rent Poll, 41% of US small businesses reported they couldn’t pay their rent in full and on time in November. That was a 4 percentage-point increase from the previous month.

READ MORE →

War on Cash: India Rolling Out Retail Pilot Program for Digital Rupee

We recently reported that the Federal Reserve plans to launch a 12-week pilot program in partnership with several large commercial banks to test the feasibility of a central bank digital currency (CBDC). The US isn’t alone in experimenting with digital currency. India is working on developing a digital rupee and recently announced the second phase […]

READ MORE →

China Likely Stockpiling Gold to Minimize Dollar Dependence

China is likely quietly stockpiling gold in a bid to further minimize its dependence on the US dollar.

READ MORE →

Comments are closed.

Call Now