Taps Coogan – December 22nd, 2023
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The following chart, via the always-interesting Daniel Lacalle, shows a measure of developed market debt-to-GDP going all the way back to 1800.
The punchline is that current developed-market debt-to-GDP ratios are not only higher than they were during World War II and I, but as high as they have been since the Napoleonic Wars (another world war).
While past surges in government debt-to-GDP have been caused by military spending associated with world wars, global and US defense spending are at about their lowest levels in 100 years relative to GDP and relative to other forms of government spending (see here, here, here).
The rise in debt since the 1970s is all about social spending and has happened despite booming demographic growth that has seen working age populations more than double since 1970, gain as a share of the overall population, and the entrance of women into the workforce.
Not only are those demographic tailwinds now turning to strong headwinds as working age populations stagnate, we’ve likely embarked on a new cycle of high intensity regional conflicts unseen in many decades if not the entire post-war era.
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Ah, but it is a total bargain. Think of all the great things we are getting for that money: an expensive University system that trains future leaders to hate Western Civilization, drug infested unsafe streets, gender transitions, green energy malinvestments, DEI beaurocracy,….the list goes on and on. The debt burden is so worth it!
Governments are broke but they won’t stop spending. Expansion into all sectors of the economy has become a thing. Adding regulations to the private sector is a Trojan horse that weakens the private sector that drives economic growth. All in all the expansion of governments brings with it a fair amount of negative ramifications. One of the biggest is corruption, another is the concentration of wealth, and with this, the concentration of power.
https://brucewilds.blogspot.com/2023/12/the-nature-of-government-bureaucracies.html