Government Debt Doubles Since 2007

{sarcasm begins} Whew. Isn’t it great that we learned our lessons because of the Great Recession? No more ridiculous debt and even governments living within their means? {sarcasm ends}

Since 2007, the total debt of the world’s governments has doubled. In 2007 just before The Great Recession (The Second Great Depression), governments owed $29.2 trillion. Now, they own $59.1 trillion.

“In the U.S., the debt-to-gross-domestic-product percentage edged up to 233% in 2014 from 217% in 2007. In Spain the figure jumped to 313% from 241% and in Japan it rose to 400% from 336%. There is no single “right” number, but obviously higher is riskier.” – LA Times

US home owners learned their lesson or were scared out of the real estate market to the point that mortgage debt has dropped from $10.61 trillion (2007) down to $9.52 trillion (2016). Student debt, however, has risen from $0.59 trillion (2007) to $1.35 trillion – effectively balancing the total private debt.

“Add in household, corporate and bank debt and the grand total was a mind-boggling $199 trillion in mid-2014, up 40% since 2007, according to a study last year by McKinsey Global Institute.”

Two solutions are being discussed, each of which are considered dramatic. 1) Print more money to get the economies going. That’s been tried frequently, is at least familiar, but could trigger hyper-inflation. 2) Debt jubilees were common centuries ago. When economies became too complicated or had too much debt, governments could declare a jubilee, a cancellation of everyone’s debt – which was highly popular unless you were a lender. Assets are accumulating rather than circulating, further slowing economies and recoveries, and increasing inequalities, and inspiring the negative interest rates being issued by banks. There seems to be no simple, equitable, and appealing solution, which means something unsettling is probably about to happen on purpose or by consequence.

(Click on the graph for the link.)

“Another Financial Crisis?” – Los Angeles Times