China’s terrifying debt ratios poised to breeze past US levels

China’s terrifying debt ratios poised to breeze past US levels

From telegraph.co.uk

The China-US sorpasso is looming. I do not mean the much-exaggerated moment when China’s GDP will overtake America's GDP – which may not happen in the lifetime of anybody reading this blog post – as China slows to more pedestrian growth rates (an objective of premier Li Keqiang.) The sorpasso may instead be the ominous moment when China’s debt ratios overtake the arch-debtor itself. I had presumed that this inflection point was still a very long way off, but a new report from Stephen Green at Standard Chartered argues that China’s aggregate debt level has reached 251 per cent of GDP, as of June. This is up ... (full story)

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Jul 23, 2014 4:31am

I just got it! The supply of debt is inexhaustible!

That means: I have some money in 'the bank', I decide to make something (car, TV, etc) and sell it because I need more cash. To do this I take money from 'the bank', pay suppliers for parts and materials, suppliers put money back into 'the bank'.

I try to sell what I made to you because you want/need what I made. You buy the item, but you don't have enough money, so you borrow from 'the bank' and pay me. I put my money back into 'the bank'.

Result: Bank has same money, plus you owe 'the bank'.
Bank is happy for you to owe them because you pay a percentage for that 'privilege', so they get money for nothing. No wonder bankers smile secretly.

Solution: don't borrow money (like your grandparents always told you).

BTW you have to keep working to feed yourself and pay for all these debts.
Also I have to keep making stuff to feed my family etc.

Unfortunately I think we would all be back in the middle-ages pretty quickly if people stopped borrowing money.