Sunday, June 7, 2020

Federal Debt vs Domestic Private Debt vs Worldwide Debt

My analysis prior about Federal Debt in relation to Domestic Debt, to calculate the overall money supply in the United States is assuming that the DEMAND for those dollars are only domestic and remain constant.

Federal Debt makes up 20% of total domestic debt (private & Government).

Remember, money is essentially debt.

So, what about how the Federal Debt compares to WORLDWIDE private AND Government debt (AKA Total Worldwide Money Supply)?

I don't know specifically how I would be able to measure the worldwide debt, but this gives another layer of complexity & buffer for the United States against hyper-inflation:
OKAY. So demand has been reduced dramatically around the world, our $21 trillion GDP has basically been paused for 2 months, so to keep it afloat (rough math), the government had to add $3.5 trillion to keep the economy running somewhat smoothly. That's a lot of printing, you idiots probably expect inflation. Wrong, step away from the US and look at what other countries are doing, the ECB (European Central Bank) and BOJ (Bank of Japan) are having to print trillions of dollars worth of EURO and YEN to keep their economies going, along with every other country getting pounded. Not only that, but since the US dollar makes up 70% of global transactions, in liquidity terms, trillions worth of euro and yen is MUCH MUCH more than any amount Jpow feels like printing, there's no way our printing could offset what the rest of the world is doing, so inflation isn't coming. If you want proof, just look at the euro/usd (going lower) and literally ANY emerging market currency is getting absolutely clapped vs the dollar.
Furthermore, not only is US corporate debt at an all time high, but emerging markets, the eurozone, and asia has borrowed more dollars than ever before at any point in history, basically everyone around the world's debt is denominated in US DOLLARS. So what's about to happen? It's already happening, demand for US dollars is going up because everyone around the world wants to borrow more to offset cash flow concerns and pay off existing debts, which will cause the dollar to increase in value. What happens when the whole world has debt in dollars and the dollar goes up in value? DEBT BECOMES MORE EXPENSIVE. This is DEFLATION, and in particular and even more terrifying DEBT DEFLATION, a phrase that would make Jpow absolutely shit himself (and he knows its coming). This has already started before the whole beervirus nonsense, look at Venezuela and Zimbabwe, they had too much dollar debt, no one wanted to lend to them anymore and whoops, their currency is worthless now. It's going to be like a game of musical chairs for people trying to get access to dollars, starting with emerging markets and eventually moving into the more developed economies. The result: massive corporate bankruptcies, countries defaulting on debt (devaluing their currencies) and eventually a deleveraging of massive proportions. This WILL occur and no amount of printing can stop it, it's already too far gone.
In my previous model of hyperinflation-math, the assumption was that the DEMAND would remain constant. The SUPPLY (or debt), would decrease, resulting in a shrinkage of SUPPLY. When the Supply decreases and the Demand remains the same, that is deflation. The dollar increases in value.

Compared to the rest of the world, is it possible for total US debt (federal and private) to exceed the rate of increase that you see in the rest of the world?

Obviously no.

So, in relative terms, the US monetary supply will shrink in proportion to the rest of the world. In subjective terms, the SUPPLY will be shrinking. This will be at the same time that the overall money supply worldwide will shrink as debt gets written off. I think that government simply will not be able to keep up with printing enough money to offset the debt write-offs as we saw in 2008-2011.

On the DEMAND side, you have other foreign entities wanting to get their hands on some of that US dollar, which is above and beyond what the domestic demand would had been.

So you have a decrease in SUPPLY with a simultaneous increase in DEMAND for US dollars. That increases the purchasing power of the US Dollar worldwide.

International supply and demand on money supply is something I could look into further.

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