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Global debt has hit $152 trillion warns the International Monetary Fund (IMF). The global economy is like a house of cards, warn those who love to say we face doom. But they miss the point.

Question: is high debt the cause of the global economy’s woes, or a symptom of something more serious? If it is the former, then blame central bankers and greed. If it is the latter, then maybe the cure is quite different from what you might think it is.

According to the IMF, global debt is now worth 225% of global GDP, but, and this is what has really got analysts worried, private debt accounts for around $100 trillion of the total.

Here is the point that is getting missed.

Debt is simply the way savings are re-channelled. Now some people, the fiat money guys, will jump on that statement and say that money is created by banks and there is no relationship between borrowings and savings. But that is not true, there is.

Across the global economy money earnt is either spent or saved. Production either consists of goods sold to consumers or capital goods, aka investment. Ergo investment must equal net savings.

But what happens, if across the world people save more, but companies do not want to invest more. One of two things happen. Either this money saved sloshes around the banking system, pushes down on interest rates, and others borrow a similar amount of money, reducing net savings, or it drains out of the economy,l and is lost forever.

If savings are greater than borrowings, we should get deflation and spare capacity. If borrowing is greater than savings, we usually get inflation.

Right now, and for a whole variety of reasons, savings are high. There is a global savings glut, and lots of spare capacity. That is why rates are low, inflation modest, and investment is low because there is insufficient demand to justify investing.

The reasons why savings are high are many fold, but in one sentence they are: demographics – as the baby boomer generation approaches retirement they save more; globalisation increasing the rewards to capital and decreasing the rewards to labour, leading to higher corporate profits and lower wages.

Technology is having much the same effect, with rising inequality in the developed world as the super-rich tend to save more, and the rise of China where savings are especially high. Germany is part of the problem too, and until recently high commodity prices added to it as commodity producers tend to save more than commodity consumers.

Some of these drivers may go into reverse on their own volition.

But, if they don’t or this reversal takes an age, there are only two solutions:

Solution one, greater government spending, transferring debt from the private to public sector.

Or the monetisation of debt via printing money, probably involving some kind of helicopter money, or central banks buying permanent government bonds carrying zero interest.