The developed world’s Ponzi scheme is caused by record-high levels of public and private debt. As Boston Consulting Group notes, it is. “The developed world’s Ponzi scheme is caused by record-high levels of public and private debt. And it is exacerbated BCG: Ending the Era of Ponzi Finance. Ending the Era of Ponzi Finance Stelter of the Boston Consulting Group that examines the magnitude of the challenge facing the The greater the weight of speculative and Ponzi finance, the smaller the overall margins of.

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How much money are we talking about?

BCG – Ending the Era of Ponzi Finance Economist American Debt | Consultant’s Mind

The same holds true for most countries in Europe, where the descendants of immigrants from Turkey, Africa, and the Arab world tend to perform less well than nonimmigrants or the descendants of immigrants from other regions. It is time to act. Public spending on social welfare will have to be cut, even as dinance in new areas of social investment will have to be increased.

Of the factors Gordon cites for this phenomenon, the most important is diminishing returns from innovation. This is partly a consequence of the Ponzi scheme itself. Increase the efficiency of government.

Developed countries have to increase their efforts to decouple economic development from resource consumption. He attracted investors by promising extraordinarily high returns—50 percent within 45 days.

Inan Italian immigrant to the U. Detailed information on the use of cookies is provided in our Privacy Policy. Europe, the US, and Japan have taken on monstrous levels of debt and are not really getting a good return on that money. Only logged in users are allowed to post comments. Stock Market Waterfall Decline – 24th Dec The threshold for sustainable government debt is a debt-to-GDP ratio of roughly 60 percent. Avoiding sovereign default is lengthily treated by the BCG report, which lays down 10 needed steps starting with an immediate reduction of the debt overhang by a mixture of writeoffs, restructuring, austerity, higher taxes, inflation, and raising employment.

Consistent increases in productivity have made possible the economic transformation of the developed world over the past years and of emerging markets today.

Altogether they received, in different ways, a total of about billion from governments and the ECB in yearbut today at the start of have about billion euros of combined debt. Significantly, of 8 developed countries analysed by the Bank for International Settlements BISonly three – Japan, Germany and Italy – did not show an almost certain strong, even massive growth of public debt tofor the simplest of reasons: This in no way is the end of the story because Ponzi finance-Ponzi wealth is not only cancerous for banks – transforming them into organized crime syndicates – but parasitic and destructive of the real economy.


But leaders from all social sectors—government, business, organized labor, environmental and other stakeholder groups—need to act decisively and quickly in order to secure future economic prosperity, social cohesion, and political stability. During the past several years, we have spent a great deal of time focusing on the problem of excessive debt.

To be sure, equity and commodity markets kicked off Year with a traditional refusal and rejection of the real world – the financial markets need to drag in more hopefuls, more stupids and more greedies right up to the wire.

This sounds like it could or might be feasible – until we look at what has happened to younger employeds, we mean unemployed persons in the “mature democracies”: In his latest Outside the Box letter, John Mauldin forwarded an excellent paper written by Daniel Stelter of the Boston Consulting Group that examines the magnitude of the challenge facing the developed economies of the world.

Uneven Progress on the Path 1. The problems of the developed economies can only be addressed in a cooperative way on a global scale. But instead of investing the money to buy the coupons and exchange them for stamps, he simply used the money of later investors to pay high returns to earlier investors, extracting huge profits along the way. In addition, the BIS has shown that the impact is similar for nonfinancial corporate debt and household debt, and that at least two of these three sectors have crossed the 90 percent threshold in most of the developed economies.

The perverse impacts as the BCG report points out, are economy-wide and include falling rates of interest and increasing resort to high risk and fragile Ponzi-style “investing”, either operated directly by households, their banks and investment advisers or by the state.

I do so deliberately to emphasize the scope and seriousness of the problem.

Unless these performance differences are addressed, it will be increasingly difficult for members of the next generation to compete with the rest of the world and with each other—let alone pay for the retirement of the current generation of baby boomers.

Terms of Use Privacy Policy. Nearly five years after the financial crisis, the leaders of the developed world are far too complacent. Like any good monetaristI believe the increase in money supply and competition for resources will drive up rates longer-term. Have developed countries become too complacent? This can be called the productivity of investment and capital. The title says it all: We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time.


The financial operators running the scheme are the private banks. Education has to play a significant role in the future growth potential of the developed economies. Fortunately, there is still time to act. Competition among countries will become more intense in the years to come.

The repayment of pknzi debt — more recent loans plus interest — is constantly pushed into the always increasingly distant future, fueling an endless process of debt refinancing. Quality education will be the decisive factor in protecting and increasing GDP per capita. Launch the next Kondratiev wave. Ending the Era of Ponzi Finance. In a provocative paper, the renowned growth researcher Robert Gordon, of Northwestern University, makes a compelling case that growth in GDP per capita has been slowing since the middle of the twentieth century.

But instead of investing the money to buy the coupons and exchange them for stamps, he simply used the money of later investors to pay high returns to earlier investors, extracting huge profits along ponzk way. Financce — If that is not a strong statement, that yes indeed, the debt burden of developed economies is a Ponzi scheme that does need some unraveling. BCG argues that there are steps that can be taken to reduce the risk of this global financial car-wreck.


Nor are states and local governments immune. That is some pretty bold talk from a buttoned-downed group of consultants.

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Efforts to reduce energy consumption and ponzj emissions in order to protect the environment will lead to higher costs as well. No one knows what event may send the developed world and the global economy as a whole back into crisis.

Sort by Relevance Newest Oldest. Doing so will require a series of initiatives to reduce the decline of the workforce.