So what do you not get when you fill a room with some of the Smartest People in the World™? A nine followed by sixteen zeroes:
When Group of 20 finance ministers this week urged the Federal Reserve to “minimize negative spillovers” from potential interest-rate increases, they omitted a key figure: $9 trillion.
That’s the amount owed in dollars by non-bank borrowers outside the U.S., up 50 percent since the financial crisis, according to the Bank for International Settlements. Should the Fed raise interest rates as anticipated this year for the first time since 2006, higher borrowing costs for companies and governments, along with a stronger greenback, may add risks to an already-weak global recovery.
The dollar debt is just one example of how the Fed’s tightening would ripple through the world economy.
Despite what Paul Krugman has told you for years, and in strict accordance with a lot of things I’ve been saying since 2007, it is not an easy matter for an $18,000,000,000,000 economy to unwind from years of ZIRP and quantitative easing.
The bills for years of decadent profligacy must eventually be paid, and already they’re stamped “Overdue.”