According to the World Economic Forum, the world needs another $100 trillion debt over the next ten years. Oops... did I say debt. I meant credit. The real message was that the world will go into $100 trillion MORE debt over the next ten years. And that's just you and me. They didn't mention government debt.
That's the equivalent of the total debt available at the end of 2009: $109 trillion.
There's just one slight problem here: The world can't generate $100 billion in surplus cash over that period. According to the World Bank, the world's GDP was $59.14 trillion in 2009 and grew at an average rate of 6% over the preceding 30 years -- unadjusted for inflation. Take inflation into account and we're looking at around 0.000% growth. Negative growth if you use John Williams' Shadow Stats data.
So credit won't come from savings. It will come from creation -- by central banks printing money and commercial bank multiplying that ten-fold through fractional reserve banking. This is a great idea and should deliver something similar to the last ten years. Let's see what we're aiming for:
* Gold prices will double in real terms
* Silver prices will do better
* Oil prices will do even better
* Government deficits to rise seven-fold
* Two more wars
* A recession and low interest rates
* More bubbles
* A Great Financial Crisis
* Change we can believe in
Yup. Looks good. These researches definitely knew what they were doing. Of course, they could have taken everything we learned about economic bubbles over the past ten years, distilled it into an academic paper, and presented a prescription for what is really needed. But heck, why bother? It's not as if anyone's listening. These non-government organizations are well sponsored by banks, so you know who is setting the agenda. Banks LOVE money printing and inflation... not to mention bailouts!
Oh yeah. Forgot to mention what the WEF said we need this debt for. It's to power world economic growth. Since this is twice the credit expansion we've had over the past ten years, it stands to reason that world GDP will grow at twice the rate we saw since 2000: zip for the world, negative 2% for the US. Now double it.
Cheers,
Peter.
