When you borrow from tomorrow to spend today, that leveraged spending is good for growth. At some point, you reach an end to just how much debt you can take on. Reinhart and Rogoff suggest that threshold, based on hundreds of years of study, is 90% debt-to-GDP. At some point, you cross a line. Take a look at the chart below.
I believe we are in a low growth, deflationary-pressured world until we solve and reorganize the debt mess. A global debt jubilee? We have a serious problem to solve and there is little motivation at this point to get started. The markets may just force that hand.READ MORE