No Recovery in the Developed World’s Debt Problem

Economists still discuss whether money printing policies are successful in creating real economic recovery at the oldest money-based industrialized societies or the developed world. The US FED is tracing growth, unemployment and inflation to decide if the economy is back on track.

However, the developed world (Europe, the US, Japan and Russia) must initially improve another indicator to ensure the sustainable growth: ‘Debt to GDP Ratio’.

If a country’s government debt compared to its annual national income or GDP is increasing and if the interest rates are expected to increase in the near future public finance of such an economy is not sustainable. And more importantly confidence in the national currency of such an economy would be in jeopardy.

Debt to GDP ratio of the US had risen from 50% levels in 1990s to 60% levels before the 2008 Financial Crisis. At the end of 2008 it increased to 64.8%. In 2009 it jumped to 76% and continued climbing rapidly. Despite all recovery talks, it reached 87.1% in 2010, 95.2% in 2011, 99.4% in 2012 and 100.1% in 2013! In 2014, the problem persisted. America’s debt to GDP ratio is expected to hit 101.53%. (Source: US Bureau of Public Debt via tradingeconomics.com; http://bit.ly/1s3jIM9)

"Usa national debt 20 April 2012" by Valugi - Own work. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons - 

The picture is almost the same for Europe. Here are ‘annual debt to GDP ratios’ for Eurozone countries:

2008: 66.2%; 2009: 70.1%; 2010: 80%; 2011: 85.5%; 2012: 87.4%; 2013: 90.7%; 2014: 92.6% (estimated). (Source: EUROSTAT via tradingeconomics.com http://bit.ly/1s9rwpO)

And this is the situation for Russia:

2008: 8.5%; 2009: 7.9%; 2010: 11%; 2011: 11.04%; 2012: 11.71%; 2013: 12.74%; 2014: 13.41% (estimated). (Source: Federal State Statistics Service via tradingeconomics.com http://bit.ly/1y6qymA)

Japan has the worst case on this issue of the entire world:

2008: 167%; 2009: 174.1%; 2010: 194.1%; 2011: 200%; 2012: 211.7%; 2013: 218.8%; 2014: 227.2% (estimated). (Source: Ministry of Finance via tradingeconomics.com http://bit.ly/1qB9r4G)

When we are talking on government debts of developed countries the figures are unimaginable, tens of trillions of dollars. And as we saw above, rates of government debt to total annual output of the nation have already exceeded normal levels. They are fluctuating around 90%, 100% and 200% . But the worst fact is in all developed societies debt to GDP ratios are rapidly climbing!

And to make the matters worse despite trillion dollars of money printing operations to stimulate economies, the so called recoveries are not expected to reverse this tendency in the future even for the most optimistic predictions. An IMF study indicates that except Germany led Europe debt to GDP ratios of all developed countries (and the UK separately from the Europe) will be higher in 2018 when compared to figures today. (http://bbc.in/1BFXSiF, Table: Debt as a % of GDP).

If you can not ensure a sustainable path to reduce your giant debt mountains; it is not important how much so called ‘recovery’ or economic growth you created or how many people you employed to low-wage or part-time jobs to reduce unemployment rate.

If especially the FED can not lower debt to GDP ratio in an environment where everybody is expecting the end of zero-interest-rate policies; people might lose confidence in the US dollar, the global reserve currency and such an event might trigger the fall of current international monetary system. 

NATO's Real Enemy: Deflation!

NATO is the intergovernmental military alliance of the US, Europe, Canada and Turkey. The US and Europe are the areas where money based production or capitalism born and raised first. In capitalism production is organized with money and leads to industrialization. Europe and the US - which we can call 'the West' together - are the oldest capitalist industrialized societies on the world. So, NATO is the military alliance of the oldest capitalist-industrialized nations of our planet. Younger industry nations like Turkey or eastern European countries are on supportive roles.

Today, NATO sees Russia and ‘terrorism’ as its initial enemies. ‘Terrorism’ generally refers to extremist, aggressive groups who take ‘Islam’ as basis of their ideologies.  

"Rodriguez at Italian command change in Herat" by MSgt. Matthew Millson - US Air Force, through ISAFmedia. Licensed under Public domain via Wikimedia Commons

However, NATO’S real enemy is not at outside! We can define the real threat as follows: The oldest money-based economies of members of the organization have already reached their natural limits and they are actually dying.

In Europe and the US:

- Populations are aging, taking medical and social spending up

-Centralization and bureaucratization are lowering efficiency and productivity

-Nuclear family breaking up is spreading alienation and depression

-Excessive and inefficient use of resources cause debts to rise to unbelievable levels

-The society fails to offset maintenance costs of infrastructure and other critical elements of the system

As a result of all of these facts top rulers of the West, big international capital owners, try to preserve their leading positions. They corrupt money itself with the Federal Reserve System which is based on paper currencies that could be printed without any limits.

Actually the facts showing us that money-based economy is dying at the West are also bringing a severe deflation to the oldest capitalist-industrialized nations. Demand for real goods, real prices and money supply contract. That’s why the FED or other central banks of the NATO members are printing so much money. They want to prevent the collapse of the corrupt paper money supply.

"Marriner S. Eccles Federal Reserve Board Building" by AgnosticPreachersKid - Own work. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons

Military or intelligence actions of the core NATO members are not separate from economic or financial actions. Trying to pull of Ukraine from Russian influence or fighting against Taliban and Al Qaeda in Afghanistan are parallel desperate movements to ensure some relief to especially dying European money economy. Ukraine has a lot of resources and a large market to exploit which cannot be handed over to Russia, another old but also rival industrialized society. All Muslim countries in North Africa and Middle East have young dynamic populations, abundance of resources, strong demand and most importantly newly and quickly developing money economies and even industries.

Labelling Muslim countries as ‘terrorists’, ‘bringing democracy’ to them, doing nothing against armed uprisings in developing Arab countries or even provoking them, would stop or at least slow down development of money and industry economies of Muslim states which is real threat especially for Europe. Thus core NATO members aim to ensure breath taking time for old capitalist-industrialized nations.

However, the result will not change. The core NATO will not be hit by Russian or Islamist rockets but by a very big new global financial crisis, before the end of this decade.