Central banks are worried that the mountain of debt they helped create might collapse, leading to bad things. From Tyler Durden at zerohedge.com:
Something happens to the world’s “really smart people” when the topic of debt is discussed: they become blabbering idiots.
Consider that last month we reported that according to the Institute of International Finance, global debt has now hit $250 trillion and is expected to rise to a record $255 trillion at the end of 2019, up $12 trillion from $243 trillion at the end of 2018, and nearly $32,500 for each of the 7.7 billion people on planet. “With few signs of slowdown in the pace of debt accumulation, we estimate that global debt will surpass $255 trillion this year,” the IIF said in the report.
Separately, Bank of America recently calculated that since the collapse of Lehman, government debt has increased by $30tn, corporates debt by $25tn, household by $9tn, and financial debt by $2tn; And with central banks expected to support government debt, BofA warns that “the biggest recession risk is disorderly rise in credit spreads & corporate deleveraging.”
I’m sure anyone and everyone who has been following the financial situation for decades could see this disaster coming. Many expected the 1997 Asian Crisis; it happened just as 3 major business cycles hit rock-bottom together for the first time in 400 years. The Western economies dodged that by putting off their debts, and have kept doing so. We’ve seen a delaying action in the Western banking systems and stock markets for over 20 years, and the debt problem climbs higher. When it collapses at last, the crash will be the worst financial disaster to hit in a millennia – and the Western financial system won’t be able dodge it. Every fiat currency will turn to trash.