While the government agencies and economists continue to publish strong GDP figures, they seem to overlook how much debt it took to produce that growth. Or should I say, the “supposed growth.” The days of adding one dollar of debt to get one dollar of GDP growth have been long gone for more than 40 years. And, as global debt has increased, it has forced governments to lower interest rates.

Yes, it’s really that simple. I get a good chuckle when I hear analysts talk about rising interest rates to 10-15%. If the U.S. Government interest rate on the Treasury Bonds increased to just 5%, Uncle Sam would be paying over a trillion dollars a year just to service the debt. So, no… we aren’t going to see 10-15% rates again.

Well, we could… but, most of the global debt would have to collapse or be forgiven. Unfortunately, if global debt vaporizes or is forgiven, then the entire economy collapses as well. We must remember, GDP growth is also driven by oil production growth. There is no way in HADES that the oil industry can fund future production with 10-15% interest rates. IT JUST AIN’T GONNA HAPPEN.

Why? If it weren’t for the Fed dropping rates down to nearly zero, the Great U.S. Shale Oil Ponzi Scheme and the six million barrels per day of unprofitable shale oil production would have been a pipe dream. I can assure you that the shale oil industry could not fund operations or service their debt with 10-15% interest rates.

Most shale oil companies are paying on average between 4-5% interest to service their debt. If the companies’ interest rates double or triple, then it would make it extremely difficult to service the shale industry debt that is estimated to be $280-$300 billion.

However, this article isn’t about the about the Great U.S. Shale Ponzi Scheme; rather it’s about the global debt bubble propping up the economy.

According to data from the IMF and the Institute of International Finance, global debt increased four times more than the GDP growth during the first quarter of 2018. The IMF forecasts Global GDP to reach $84.8 trillion in 2018 and the Institute of International Finance reported total world debt increased by $8 trillionin the first quarter of 2018. Thus, I estimated that Q1 2018 GDP growth was $1.3 trillion, one-quarter of the $5 trillion increase from last year.

So, the world is now adding an astonishing six dollars of debt for each dollar of GDP growth:

Now, this is just an estimate as the quarterly GDP dollar figures aren’t released, but the debt is still rising at least fives times more than the GDP. It is quite amazing to see the global debt increase at such a rapid rate. The following chart (courtesy of Bloomberg), shows how much the global debt has grown over the past 15 years. However, since Q1 2008, global debt has jumped by more than​a​ $70 trillion.

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