Why The U.S. Growth Story Is A Dead Man Walking…..

Posted By on May 12, 2011

Here is a picture that explains everything.  For the U.S. to grow its way out of current problems, it will require monumental new debt creation….from which we are already buried!  But by the looks of things, most governments are going to try anyway. To put things in perspective, in order for the 2010 decade to mirror, match, or in any way resemble the prior four decades, the credit market debt will need to double from $52 trillion to $104 trillion. 

Question: So what does this all tell us….umm,  it creates the best possible case for Gold going dynamically higher and the Dollar going dynamically lower!

From ChrisMartenson.com

If we were to be given just one chart, by which we had to explain everything about why Bernanke’s printed efforts have so far failed to really cure anything and why we are pessimistic that further efforts will fall short, it is this one:

There’s a lot going on in this deceptively simple chart so let’s take it one step at a time. First, “Total Credit Market Debt” covers everything – financial sector debt, government debt (fed, state, local), household debt, and corporate debt – and is represented by the bold red line (data from the Federal Reserve). 

Next, if we start in January 1970 and ask the question, “How long before that debt doubled and then doubled again?” we find that debt has doubled five times in four decades (blue triangles).  

Then if we perform an exponential curve fit (blue line), we find a nearly perfect fit with an R2 of 0.99 when we round up. That means that debt has been growing in a nearly perfect exponential fashion through the 1970’s, the 1980’s, the 1990’s and the 2000’s. In order for the 2010 decade to mirror, match, or in any way resemble the prior four decades, credit market debt will need to double again from $52 trillion to $104 trillion. 

Finally, note that the most serious departure between the idealized exponential curve fit and the data occurred beginning in 2008 — and it has not yet even remotely begun to return to its former trajectory.

www.zerohedge.com

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