Getting perspective for reading various worldwide financial stats…
The demand for money is over $150 TRILLION in national currencies, says James Altucher. He adds to that another $50 trillion in gold (but see below), for a grand total of $200 trillion. That’s how much money is out there (James Altucher, 2017). I don’t know how narrowly he is defining money. He is comparing fiat to cryptos, so in this context he should have meant “cash”, i.e., circulating money.
Jim Rikard says that there should be $26.5 trillion in M1 by May, 2018, and he says that during recent years “de-dollarization” by countries working out bilateral and regional trade agreements that by-pass the dollar and/or by countries selling dollar denominated assets has been at least: $1.14 TRILLION, says Rikard (4/2018).
Since September 2010, when non-mortgage consumer credit bottomed at $2.5 trillion, it has rebounded at its fastest pace ever. By the end of 2017, Americans owed $3.7 trillion in outstanding consumer credit. That’s $1.2 trillion of additional consumer spending, created out of thin air (not savings) in just seven years.
During the same period, the U.S. federal government increased its spending from $15 trillion a year to $20 trillion a year. It financed practically all of this through new debts, borrowing another $12 trillion. That’s more money than the U.S. government has ever borrowed, including every penny it ever borrowed since the Revolutionary War.
Just think about that number. Our government borrowed $12 trillion in less than a decade and spent the vast majority of it (about 75%) on transfer payments.
$20 trillion ($20,000,000,000,000) of assets is presently (2018) held by the world’s 6 largest central banks. That means these banks have injected $20 trillion in liquidity into the world financial system. Of course when this lands in private banks as deposits, they can create more – lots more.
$10 trillion ($10,000,000,000,000) worth of gold is known to exist (165,000 tons calculated at a market price of $1700 per ounce). Besides that, the Kuomintang (nationalist government of China before WWII) is estimated to have removed most of the dynastic Dragon Family’s “thousands of trillions” of dollars worth of gold from China before the Japanese invaded. Maybe not that much, eh? Benjamin Fulford has been their spokesperson … . If we say the Kuomintang gold values at $40 trillion, that plus the above $10 trillion equals Altucher’s $50 trillion figure.
Average production cost for gold was around $1,100/oz in 2016.
Cryptocurrency (Blockchain Tokens)
James Altucher has three criteria for a legitimate blockchain token:
- Ultimate coin supply is capped;
- Legitimate use case;
- Quality development team and their code.
Bitcoin: Maximum number of coins that will ever exist is 21 million. At $20k each, that’s 420 billion dollars.
U.S. Consumers balance sheet: $100 trillion is $30 trillion higher than 2008/9. $25 trillion of it is real estate.
- $33.6 trillion in non-financial assets (stuff)
- $81.7 trillion in financial assets
- -$15.6 total liabilities ($10 trillion is mortgages)
Non-Corporate Business: $12 trillion
Post-Bubble: -$50 trillion guestimate
- -$10 trillion real estate-related losses
- -5.7 trillion consumer durables (low resale value) with a debt of $3.8 trillion
- -$14 in stock losses at a 50% loss
- -$5 trillion non-corporate business losses
- Pension failures and municipalities failures
- -$7 trillion: half of $15 trillion “other” assets
Total assets held by major central banks: $17.6 trillion worldwide.
Total central bank monetary stimulus since 2008, $34 trillion worldwide.
U.S. federal government debt (on the books) $20 trillion.
U.S. federal unfunded liabilities, $210 trillion.
U.S. State and local debt, $3 trillion.
Total U.S. debt, public and private: $62.5 trillion.
Total U.S. credit card debt $1 trillion.
Total U.S. student loans $1.4 trillion.
Total U.S. auto loans $1.2 trillion.
Total U.S. margin debt $557 billion.
U.S. GDP: $18.7 trillion.
Since 2008 debt has increased worldwide by $57 trillion – most of it in the emerging countries.
$72 trillion global GDP
$11 trillion assets added to central banks balance sheets globally over 2009-2015, paid for by fiat. How much has that been re-hypothicated?
$57 trillion increase in global debt from 2007 to 2014
$100 trillion in sovereign bonds exist worldwide with over $555 trillion in derivatives based on bonds. (Phoenix Capital)
To put this into perspective, the CDS market which nearly took down the financial system in 2008 was a mere $50-$60 trillion in size. So the bond bubble is literally 10X this in size and scope.
The derivatives story is key here, because all of those $555 trillion in trades are backstopped by sovereign bonds (Japanese bonds, German Bunds, US Treasuries, etc.). These are the very bonds that Central Banks have been BUYING over the last five years (thereby shrinking the amount available to the banks to backstop those trades). (ZeroHedge)
$700 trillion is the notional value of the derivatives market overall.
$17 trillion U.S. GDP
U.S. $18 trillion dollar federal govt debt.
$1.5 – $4 trillion U.S. pension shortages.
$11.87 trillion total U.S. household debt = $8.7 trillion in mortgage debt, plus $3.17 trillion U.S. household non-housing debt.
- This stood at $800 billion in 1989 and income has not gone up to match this increase.
- This is after Wall St. wrote of $1.6 trillion in bankruptcies and defaults starting in 2008.
Oil Prices are down. This means:
- For the first time in 18 years, oil exporters are pulling liquidity out of world markets rather than putting money in. While they have been net buyers in the markets, driving up the asset base, they are now net sellers.
- If we see 8 to 12 months at these oil prices the U.S. shale industry will be wiped out. The effect on junk bonds will cascade to the rest of the stock U.S. market, economy, and the dollar.
$2.6 trillion in emerging market (EM) debt. $260 billion in sovereign and corporate bonds, or one tenth of that, is in danger of being downgraded to junk, according to David Spegel, head of emerging debt at BNP Paribas. Many investment funds have rules that force them to sell any debt that is not “investment grade”.
$7.3 trillion of negatively-yielding government debt in the Eurozone, Switzerland and Japan. 1.4 billion people are experiencing negative real interest rates across the globe.
Global GDP is about $63 trillion ($63,000,000,000,000 ) if one can trust any numbers released by modern governments (11/26/11).
$707.5 trillion ($707,568,901,000,000) is the total notional amount of all Over The Counter (read unregulated) outstanding derivatives reported in the BIS semi-annual OTC derivatives report, “OTC derivatives market activity in the first half of 2011.” (One of the key contributors to global growth and prosperity from ~2000-2010 was an increase in total derivatives from just under $100 trillion to $708 trillion. The market value is probably around $20 trillion. The bulk of these are interest rate derivatives.)
In America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million); (the reverse of) 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government. It gets worse. More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. (BIS Working Papers No 300 2010) Zero Hedge
45% of American households receive some form of direct government payments.
132.5 million people pay no federal taxes whatsoever.
Half of the population may pay something in taxes, only the top 10% – people earning more than $113,000 – pay a substantive amount. These few pay 70% of all the income taxes collected.
The average couple that retires at age 66 on Social Security and Medicare will receive $1 million in benefits. On average, they and their employers paid $500,000 into the system.
As a whole, Americans owe a total of nearly $56 trillion dollars (almost 400% of GDP). That’s federal, state, municipal, corporate, and private (mortgages and student loans) debts.
We’re spending half our annual GDP on taxes and interest.
By the end of 2012, our federal national debt will likely exceed $17 trillion.
$65 trillion of U.S. Federal entitlement liabilities (close to 500% of GDP!) is the discounted net present value of current spending, should it continue at the projected demographic rate. … not $9.1 trillion (as declared) or even $11-12 trillion when Agency and Student Loan liabilities are thrown in, but $65 trillion more! Zero Hedge
Personal bankruptcies rose to 1.53 million, up 9% from 2009 … according to the American Bankruptcy Institute … and the National Bankruptcy Research Center. In the past four quarters (through June, 2010) total debt has dropped by a record $789 billion even though federal debt has surged by an outsized $1.45 trillion. (That makes a) record $2.235 trillion contraction in private debt outstanding. (Hoisington Investment Mgt Co)
These charts by Ron Griess | june 15, 2010 show Gross Federal Debt, Gross Federal Debt as a percentage of Nominal GDP, the U.S. Federal Budget deficit at the end of May, 2010, bank failures in 2008, 2009, and 2010, and more.
(07/07/10) Over the past 10 quarters, on average the US had added $400 billion in debt each quarter, while increasing its deficit by about $275 billion. … The US is now stuck with rolling over half a trillion in short-term debt on a monthly basis ($660 billion in May or June). … With the US expected to generate a deficit of about $1.5 trillion in the next fiscal year, the napkin estimate says that the US will likely incur between $2 and $2.5 trillion in debt over the next year. (Tyle Durden, Zero Hedge) (But) on June 30, the US closed the books with just over $13.2 trillion in total debt, an increase of $210 billion in one month, or $2.5 trillion annualized.
The total US debt to GDP in the first quarter of of 2010 stands at 357% (Hiosington Investment Mgt Co)
Negative Equity Breakdown … as of Q1 2010: … There are 4.1 million homeowners (in the US) with more than 50% negative equity (they owe 50%+ more than their homes are worth). … There is almost $2.4 trillion mortgage debt for homes in negative equity. … The total negative equity is $771 billion.
- $50.4 trillion of US domestic debt outstanding at the end of 2009, government debt was actually only 20 per cent of that, or $10.2 trillion. US debt outstanding peaked in the first-quarter of 2009 at $50.9 trillion – meaning $50.9 trillion of debt had been created to finance a $14.1 trillion US economy — a staggering leverage ratio of 359 per cent. (Get ready, get set, deleverage! With one notable (US) exception, Posted by Tracy Alloway on Jun 04)
- The government is getting its money to finance its exploding deficits (for now). But it’s hogging all the available supplies, while American businesses and average consumers are getting shut out or even shoved out. (U.S. Federal Reserve: Flow of Funds Accounts of the United States, Flow of Funds, mid October, 2009)=================================
* In the first half of 2008, the U.S. Treasury raised funds at the annual pace of $411 billion in the first quarter and $310 billion in the second quarter.
* But if you think that was a lot, consider this: THIS year, the Treasury has stepped up its pace of borrowing to annual rates of $1.443 TRILLION in the first quarter and $1.896 TRILLION in the second quarter. That’s 3.5 times and over SIX TIMES MORE than last year’s, respectively.
Meanwhile, the private sector is getting killed …
* 2008, banks provided new credit at the annual pace of $472.4 billion in the first quarter and $86.7 billion in the second. This year, they’re not providing ANY new credit — they’re actually LIQUIDATING loans at the rate of $857.2 billion in the first quarter and $931.3 billion in the second. So if you’re running a business, you may want to think twice before asking your bank for more money. Instead, they may decide to TAKE BACK the money they’ve already loaned you!
* Ditto for mortgages. Last year, mortgages were being created at the annual clip of $522.5 billion and $124 billion in the first and second quarters, respectively. This year, on a net basis, mortgages haven’t been created at all. Quite the contrary, the Fed reports that, on a net basis, they’ve been liquidated at an annual pace of $39.3 billion in the first quarter and $239.5 billion in the second.
* Getting cash out of credit cards and other consumer credit is even tougher. Last year, folks were able to add to their consumer credit at annual rates of $115 billion and $105 billion in the first two quarters. This year, in contrast, they’ve been forced to CUT back on their credit at annual rates of $95.3 billion in the first quarter … and at an even faster pace in the second quarter — $166.8 billion.
Never before in my lifetime have I witnessed a more severe case of crowding out in the credit markets! (Silver Bear Cafe, Marty Weiss)
Around the World
Japan’s govt debt-to-GDP is triple that of US, standing at $10 trillion, while their economy is 1/3 the size of US. Japan’s (aging) pensioners are now drawing out, which means Japan’s big public pension fund (7x larger than the larget California pension fund) will be selling the Japanese bonds they hold (70% of their holdings).
Radiant Asset Management’s David … Ross points out (that) total debt by year-end 2009 will be $13,000bn – 90 per cent of GDP. By next year that figure is expected to rise to 100 per cent and remain there (The US debt to GDP balance, and China by Izabella Kaminska)
(US) debt-to-GDP ratio now stands at 375%, compared with 275% in 1929. (Prudent Investor – He must be including public and private debt.)
For the full fiscal year, which ends in September, the Obama government revealed its new budget deficit. If nothing goes wrong, it will reach $1.84 trillion this year – nearly 400% of the record set last year. In 2009, the US government will borrow 50 cents for every dollar it spends. Accumulated deficits to 2019 will reach $7.1 trillion, says the forecast. Moody’s was so alarmed it warned that the US may lose its Triple-A bond rating, which it has had since 1917.
Deficits as a % of GDP
US Govt-Backed Assets
Federal Reserve officials are open to raising the amount of Treasury and mortgage-related securities (beyond the) $1.45 trillion of mortgage-related securities, as well as $300 billion in longer-term Treasury securities (already committed). Officials also projected an even deeper recession than they expected three months earlier and a more sluggish recovery in the next two years … (Wall St Journal)
The recognized “cash based” numbers are set to double over the next four years, but the bigger columns of numbers are widely understood as the REAL extent of the liabilities by readers of this letter, as I have been reporting them for years along with many others. (TedBits, June 4, 2009)
California’s stated debt — the value of all its bonds outstanding — looks manageable, at just 8 percent of its total economy. But California has big unstated debts, too. If the fair value of the shortfall in California’s big pension fund is counted, for instance, the state’s debt burden more than quadruples, to 37 percent. http://www.nytimes.com/2010/03/30/busine….
According to Ned Davis Research, at the peak of the credit bubble in March 2008, there was $49 trillion in total credit market debt outstanding and the United States GDP was $14.19 trillion. That’s a debt-to-GDP ratio of 350%… an all-time high. …
Doug Noland, author of the Credit Bubble Bulletin, is one of the top credit analysts in America. You can read his weekly bulletins free at the Prudent Bear website (http://www.prudentbear.com/index.php/commentary/creditbubblebulletin). He estimates private credit is contracting by around $2.5 trillion per year… and the government needs to create $2.5 trillion a year just to keep the system from collapsing into deflation again.
Commercial Real Estate
… A record $237 billion of (US commercial mortgage-backed securities – CMBS) was sold in 2007, compared with $12 billion in 2008 and $1.4 billion last year. … Sales of commercial mortgage-backed securities will likely remain below $15 billion in 2010. … The banks would like to lend, (but) there are fewer properties to lend against (because property values are down and/or already encumbered). … U.S. commercial real estate prices are 42.9 percent below October 2007 peaks … Two-thirds of loans (already) bundled and sold as securities, amounting to $410 billion, may require more cash as property values plummet and underwriting standards tighten, according to Deutsche Bank AG data. (BusinessWeek, Jan 19, 2010)
Federal Reserve Balance Sheet – This Is Your Economy on Credit Crack…, April 16, 2009
Banana Ben Bernanke has grown the monetary base from just $842 billion in August 2008 to a record high of $1,723 billion as of April 2009. But it’s not only the size of the (Fed’s) balance sheet that is so daunting; it’s the makeup that’s becoming truly scary.
Historically speaking, the composition of the Fed’s balance sheet has been mostly Treasuries. And the Federal Open Market Committee would typically raise rates by selling Treasuries from its balance sheet into the market to soak up excess liquidity. However, because of the Fed’s decision to purchase up to $1 trillion in Mortgage Backed Securities (and other unorthodox holdings), it will not be selling highly-liquid US debt to drain reserves from banks. Rather, it will be unwinding highly distressed MBS and packaged loans to AIG.
(Today) only $505 billion of the $2 trillion balance sheet is composed of U.S. Treasury debt. Today, most Fed assets are derived from the alphabet soup of lending programs including $250 billion in commercial paper, $312 billion of Central Bank liquidity swaps and $236 billion in mortgage-backed securities. …
TARP – Money and Markets, April 13, 2009 – The government’s TARP funds to bail out the nation’s banks are nearly exhausted. But, at the same time, bank losses from this debt crisis have doubled from $2 trillion to $4 trillion, according to the IMF. …
Just in the last 18 months, Washington has invested, loaned, or guaranteed $14 trillion — more than the nation’s entire gross domestic product, more than the national debt we’ve built up over more than two centuries — money we do not have, money they could not possibly borrow, paper money that they’re already starting to print. Fourteen trillion dollars and counting! And now, the Fed has used up all its reserves. Now, for the first time in history, the Fed is running the printing presses for corporate bailouts! This has never worked in other countries and will never work today.
March 31, 2009 (Bloomberg) — The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year. … The nation’s gross domestic product was $14.2 trillion in 2008. The following FDIC liability is not included and must be added.
FDIC Insurance Inspected (ftAlphaville), April 6, 2009 — Rolfe Winkler at Option ARMageddon points out that (the) temporary increase (of the insured deposits limit up to $250,000 from $100,000) takes FDIC’s insured deposits from $4,800bn to roughly $6,200bn. And that figure increases to $6,400bn if you include the debt issued as part of FDIC’s temporary liquidity guarantee programme (TLGP). $6.4 trillion.
April 2 ft.com/alphaville, Big numbers, derivatives edition, by Tracy Alloway — the notional value of derivatives held by US banks increased 14 per cent in the period, to $200 trillion.
April 2, 2009 G20 agrees to IMF boost, tax-haven crackdown by William L. Watts — MarketWatch Group of 20 nations agreed to provide a total of $1 trillion in resources to the International Monetary Fund and other international institutions in an effort to confront a deep
Compare to the totals below (with thanks toMarket Skeptics and Eric deCarbonnel, March 22, 2009):
Total world currency reserves: $6.9 trillion (12/31/2007)
Total US reserves, worldwide: $4.4 trillion (12/31/2007 – This increased $1 trillion over that year)
Total Federal Reserve balance sheet assets for the week of October 21, 2009, hit a record $2,174 billion
Securities held outright: $1,678 billion (an increase of $99 billion MoM
Net borrowings: decline of $23 billion to $265 billion. Total bank borrowings hit record, pass $1 trillion.
Float, liquidity swaps, Maiden Lane and other assets: $230.2 billion, a $1.5 billion decrease … At $41 billion in liquidity swaps, foreign banks are once again massively exposed to underfunding of dollar-based assets.
Total bank reserves with the Fed hit an all time high, surpassing $1 trillion, as banks continue to hoard cash.
Hedge Funds: $1.6 trillion
Total world Sovereign Wealth Funds: $2.5 trillion (These are not included in currency reserves)
UAE: $1.3 trillion
Singapore (Temasek Holdings, and GIC):
Total Sovereign Wealth Fund US dollar holdings: $1 trillion
Total worldwide dollar holdings of foreign govts, combined: $5.4 trillion
Total US holdings of foreign reserves: $0.7 trillion (i.e., swamped by the other totals)
Corporate Default Rates – RBC Capital has a summary of Moody’s March default report, released late Monday. … “The Moody’s forecasting model now sees default rates peaking at 14.6% in Q4 2009.” … Default levels during the Great Depression peaked at 15.4 per cent, according to Moody’s.
OPEC has lost $4.5 trillion in oil receipts (Lindey Williams)
And from Finance & Markets Monitor … expect total losses of, say, $4 trillion …
Life Insurance – US life insurers hold about 5% of their assets in Commercial Mortgage-backed Securities (CMBS), which according to figures from the American Council of Life Insurers (ACLI) would be around $110 billion of $529 billion in mortgage-backed securities. Total assets for the industry were $2,200 trillion at year-end 2008. A report from rating agency Moody’s, US Life Insurers’ Commercial Mortgage Exposure and Losses Are Manageable, played down the potential for losses to insurers from CMBS, putting expected losses from CMBS at around $2 billion over the next 2-3 years. However, a stress scenario of $16 billion losses resulting in “multi-notch” downgrades was possible, although described as “highly remote”.
Total losses on home mortgages and their derivatives of just under $2 trillion by the end of (2009) this crisis, of which about $1.1 to $1.2 trillion have already been recognized. That is pretty much a consensus number among many market watchers …
Foreclosure filings were reported on more than 2.8 million properties in 2009, up 21 percent from the previous year and 120 percent from 2007, according to RealtyTrac. With nearly 10 percent of mortgages now delinquent–which is also a new record–even more homeowners appear headed for foreclosure this year.
Commercial real estate … We expect $300 to $500 billion in lender losses from commercial real estate.
Credit card and installment sales contract delinquencies and defaults (including student loans) … We estimate that losses in the $150 to $200 billion range are likely in this category.
Corporate debt defaults … in the U.S., one can easily expect several hundred billions in losses …
Much of the forgoing losses are “baked in” … with the rest soon to materialize given continuing valuation trends. We therefore see another $1.5 to 2.0 trillion of as yet unrecognized loses still to hit the financial sector and challenge its institutions. …
Retirement funds: We are also very concerned about the impact of the massive decline in the values of 401(k) portfolios and large pension funds. … In the long term, pension funds won’t be able to meet their obligations to beneficiaries (without help). …
Natural Gas shut-in price level is $3.50 April, 2009
Uranium cost of production is around $40 in 2009. There are more than 40 nuclear power plants under construction in 12 countries, another 110 are planned and 272 are proposed, according to the World Nuclear Association. (12/2009)
Zirconium: Plans are afoot to expand capacity, but the technology to make zirconium is limited to a few firms, projects are capital intensive and take a long time. … “If demand truly materialises as the numbers from World Nuclear Association indicate … There is potential for zirconium alloy shortages,” said Jonathan Hinze a vice-president at the Ux Consulting Company. … “Zirconium is the only proven alternative as far as the industry is concerned,” said British Energy, part of France’s EDF Energy (EDF.PA). … Cezus-Areva estimates it supplies about 40 percent of global demand for the zirconium market estimated at around 5,000 tonne.