Charts of the Month - July '21

Debt-Driven GDP

We typically hate any chart that has more than three lines because it makes you feel like a cat chasing a laser pointer, but please give this one a chance.

The world is addicted to debt, we all know that. Debt drives growth, albeit at a constantly higher cost (or less efficiently), and for better or worse, as someone smarter than us once said, “there is not a system of government that we know of that works without growth” (seriously we don’t remember who said this so if it’s you, DM us and we'll tweet out your name – except you Barry, we know it wasn’t you).

So which group of consumers drives the most debt, and therefore growth? Depends on what decade you look at.

Household consumers drove much of the post-WWII credit expansion through about the mid-'60s when Corporates began to take the lead.

In the mid-’70s, Government started to figure the game out.

Globalization taking off in the ’80s saw all three groups juicing their new addiction to more and more cheaper stuff coming in from abroad.

The ’90s saw a few peaks from Corporates during the rise of the tech bubble and financial engineering (thanks to Black, Merton & Scholes).

After the tech world blew in 2000, Government and Households picked up the slack.

But after the world blew up again in 2008 and the zombie apocalypse befell us in 2020, Government looks to have secured the lead pony in the race. A race that we’re all going to lose at some point.

Somehow though… Twitter is very adamant at reminding us that Bitcoin fixes this.

Financial Industry Penalties

We’ve been harping on the Liz Clarmen interview of Jack Mallers since it first aired (it’s still on Facebook if you want to watch), because it represents everything that’s wrong with the blatantly obvious love fest taking place between mainstream media, policymakers, and their corporate sponsors/backers/rulers (whatever you want to call them).

She actually said, in one of the more naive or purposefully misleading lines we’ve heard in a long time, “what if they [banks and international cooperatives] are trying to protect them [the people of El Salvador]”.

Seriously? The institutions that she purports as ‘good for these people’ are focused on margin expansion and self-preservation. That’s it.

Thankfully, Dan Held introduced us to this site, and it’s equal parts amazing and enraging.

Since 2000, the financial services industry has been fined $333 billion for everything from mortgage abuses to consumer protection-related offenses, toxic securities abuses, and employment-related offenses.