It’s hard to calculate the amount of stimulus firehosed into the global economy post COVID. We do know for sure that is amounts to tens of trillions. While the ordinary plebs at home got a few thousand to tie them over to pay for toilet paper and Clorox wipes, large companies and institutions got billions.
Total debt now approaches $300 trillion. Normally this might be viewed as oppressively deflationary — but lads the firehose is still on and government debt is still increasing at a rapid rate.
Also let’s not forget that Congress authorized $4 trillion to be wasted and still has another trillion left to spend. Think about this and every country in the world and now you can begin to understand how and why inflation is our albatross.
Total debt levels, which include government, household and corporate and bank debt, rose $4.8 trillion to $296 trillion at the end of June, after a slight decline in the first quarter, to stand $36 trillion above pre-pandemic levels.
Globally, household debt rose by $1.5 trillion in the first six months of this year to $55 trillion. The IIF noted that almost a third of the countries in its study saw an increase in household debt in the first half.
“The rise in household debt has been in line with rising house prices in almost every major economy in the world,” said the IIF’s Tiftik.
How does this affect you? Quite severely actually. Not only are rates going up and the cost to carry debt, but we are seeing unprecedented inflation in just about every facet of the economy.
This is the reason why even on big down days like today oil will not go lower. We have a problem and it is starting to look a lot like stagflation, slowing growth meets inflation. The idea of bonds becoming a safe haven in a bear market is quickly becoming a fantasy. Today alone the 10yr is +7bps to 1.83%. We can only see lower rates if that debt becomes a burden and that debt can only become a burden if and when yields go too high and/or the general economy undergoes a harsh downturn, in which case you’ll be better off shorting stocks to hedge instead of attempting to hide in bonds.
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All this printing for COVID stimmy and in the end, we’ll be back to where we were only worse off with not much to show for it. I expect the real job losses to come when these bs propped up companies that needed the free money collapse and all these tech workers hit the pavement looking for work on unemployment.
There was a short window where the job seeker was in the driving seat.. soon enough you’ll be back to lucky to have a job like 09
What a waste of debt… only to be worse off than you started
What’s really crazy though is for the first probably 50-60% of downside in the major indices, the labor market will actually improve. By that I mean more job positions will be filled and in turn the supply chain will actually get a bit better.
Probably forcing people to go back to work true
I’m out of answers….I’m calling William Devane and Rosland Capital now.
The margin clerks have been sighted in the public square.. dick guillotines are prepared.