More on total debt (vs government debt).
... the Debt Supercycle is the decades-long growth of debt from small and easily-dealt-with levels, to a point where bond markets rebel and the debt has to be restructured or reduced or a program of austerity must be undertaken to bring the debt back to manageable proportions.
How did we get here? We simply kept borrowing ever greater amounts of money at an increasingly rapid pace. Look at the chart below. It is about six months old, but not much has changed.
And it is not just the US. Take a look at the chart of G-7 debt (courtesy of GMO, more about which later). That is one ugly and unsustainable chart. In 1950 the G7 countries were recovering from very large war-time debts. Now we don't have that excuse. Nor do we have the option of doing what they did. They cut military spending, inflated a little in nominal terms, and grew their way out of the problem.
For much more, see The Debt Supercycle by John Mauldin, July 17, 2010, at Thoughts from the Frontline.
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