• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Guest Post: Debt Saturation And Money Illusion

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Wed, 05/04/2011 - 15:56 | 1239867 dexter_morgan
dexter_morgan's picture

“Gold is the money of kings, silver is the money of gentlemen, barter is money of peasants,  debt is the money of slaves, & fiat is the money of fools.” 

Wed, 05/04/2011 - 16:49 | 1240036 That Peak Oil Guy
That Peak Oil Guy's picture

Gord overlooked a critical point; productivity is tightly coupled to energy.  Whether or not you believe that peak oil is here we all know that oil is getting harder and more expensive to extract.  More expensive energy = lower productivity.


Thu, 05/05/2011 - 11:02 | 1243273 Peak Everything
Peak Everything's picture

Yes. To write a long article on debt and the ability to service it without mentioning net energy is a good indication that the author does not have a clue what he is talking about.

Wed, 05/04/2011 - 21:12 | 1241493 Sam Clemons
Sam Clemons's picture

It is not related to this comment, but I tried recreating that chart showing delta GDP / delta debt because I believed that it made sense that that would happen.

However, I used the same data and tried it for both real GDP using official statistics, real GDP using Shadowstats CPI and nominal GDP and the corresponding values for debt, and had no such luck recreating that chart. 


I asked the creators how they got around the problem of it actually being negative EVERY TIME delta GDP is negative (every recession) as long as delta debt was positive and there was no answer. 


Therefore, although I'm not going to argue that our economy is destined for failure, I take that chart with a grain of salt until I get an explanation on it.


Thoughts anyone?

Thu, 05/05/2011 - 00:08 | 1241970 defender
defender's picture

Wouldn't it be better to plot delta (GDP) / delta (debt to GDP)?  I am assuming this is what was done, even though the graph doesn't say anything about it.

Personally, even though it would take a fair amount of work, I would be very interested in seeing a graph of delta GDP / delta [total interest paid annually (as a % of GDP)].  Me thinks this would be the more telling metric.

Wed, 05/04/2011 - 16:00 | 1239873 Archimedes
Archimedes's picture

Totally off topic and perhaps I am becoming paranoid from being on this site too much but Tyler, are you monitoring my web activity?

Last week I went to look at umbrellas at Amazon and then saw an ad on this site from Amazon with umbrellas, earlier today I looked at guitars online and saw a guitar ad here seconds later. I just looked at Mother's Day Rings and just saw an ad for Rings from Zales...What gives?

Wed, 05/04/2011 - 16:02 | 1239878 Tyler Durden
Tyler Durden's picture

Google adsense keeps track of your cookies from sites you visit. You should as a precaution, clean your cookie cache at least once a day.

Wed, 05/04/2011 - 16:06 | 1239906 FOC 1183
FOC 1183's picture

but then i wouldn't see ads for hot single girls in my area when i come here...

Wed, 05/04/2011 - 17:09 | 1240272 Sudden Debt
Sudden Debt's picture

or get the discounts on lesbian porn dvd collections...


Wed, 05/04/2011 - 16:06 | 1239908 gmrpeabody
gmrpeabody's picture


Wed, 05/04/2011 - 16:12 | 1239938 Archimedes
Archimedes's picture

Ah...thanks for the response. It is not a huge deal but it happened too many times to be a coincidence. It is not a big deal, actually pretty smart on Google's part. But I still ain't buying their stock!

Wed, 05/04/2011 - 16:30 | 1240027 scratch_and_sniff
scratch_and_sniff's picture

Ban them, all these parasite companies are popping up everywhere looking to track movements of anyone and everyone then making a mint from selling the information. Opt out of the lot


Wed, 05/04/2011 - 18:35 | 1240795 Absinthe Minded
Absinthe Minded's picture

S & S, thanks man. I had like 10 active cookies on my Ipad. I had just started getting crap e-mails and no doubt it was from one of these guys. If not I'm still glad they can't track me, that's bullshit. If I wanted to read their ads I would.

Wed, 05/04/2011 - 23:30 | 1241897 wisefool
wisefool's picture

Clearing cookies or implict privacy mechanism in the browser is one good way to do it, but

.... Sun Tzu says, turn your enemies strengths against him.

take a couple minutes out of your day and use search engines for non-sensical questions, and click through to end up at places like answers._____.com where _____ is yahoo, ask, etc.

"Which macaroni and cheese is the cheesiest?"

"Is it possible for a dog to run when wearing a collar?"

"Do women have hair under thier arms?"

"Does the sun rise in the east or the north?"

"Should I let my pet goldfish drink water?"


Thu, 05/05/2011 - 08:05 | 1242395 uhb
uhb's picture

Strange , i'm seeing not a single ad ;) Firefox rules!

Wed, 05/04/2011 - 16:37 | 1240085 tmosley
tmosley's picture

Gotta love the folks who were complaining about Tyler putting up all the APMEX and Cramer ads.

"What's in there?"

"Only what you take with you."

Wed, 05/04/2011 - 16:44 | 1240125 Dr. Richard Head
Dr. Richard Head's picture

That explains the SEC help wanted ads I keep seeing around here.  I guess my RedTube tranny surfing cookies suggested I apply for a job at the SEC.  I am a shoe-in.

Wed, 05/04/2011 - 17:34 | 1240390 scratch_and_sniff
scratch_and_sniff's picture

Im keep getting 'Fish Pedicure' adds, wtf? Everywhere i go i am seeing images of Goldfish sucking dead flesh off bendy toes...

Wed, 05/04/2011 - 17:05 | 1240222 Andy_Jackson_Jihad
Andy_Jackson_Jihad's picture

You can also edit your hosts file on your machine. Or more better yet, google for one and replace yours. Its nothing harmful, it just redirects known ad servers to your own machine (who then doesn't find them).

Thu, 05/05/2011 - 02:01 | 1242126 StychoKiller
Thu, 05/05/2011 - 16:08 | 1244847 DrunkenMonkey
DrunkenMonkey's picture

Thx buddy

Wed, 05/04/2011 - 18:42 | 1240840 6_7_42
6_7_42's picture

Firefox with AdBlock Plus & Ghostery extensions (all free) means never seeing an ad, being tracked or having to be paranoid.


Thu, 05/05/2011 - 00:50 | 1242039 FuturistCorporation
FuturistCorporation's picture

A more aggressive add-on than Ghostery is NoScript. Google analytics and doubleclick.net haven't seen hide nor hair of me in months.

Wed, 05/04/2011 - 16:02 | 1239901 drink or die
drink or die's picture

Clear out your cookies once in awhile.

Wed, 05/04/2011 - 16:07 | 1239926 dark pools of soros
dark pools of soros's picture

just buy the damn guitar

Wed, 05/04/2011 - 16:36 | 1240083 MolotovCockhead
MolotovCockhead's picture

Yeah, it's good investment! After reading about the hardship for years to come, you may need the guitar for some loose change singing at some street corners.

Wed, 05/04/2011 - 22:17 | 1241716 Hephasteus
Hephasteus's picture

Buy Yamaha. For all your guitar synthesizer, amplifier, atv, motorcycle, outboard marine engine, boats, generators, insert every product here, needs......

Wed, 05/04/2011 - 16:18 | 1239967 gordengeko
gordengeko's picture

It's just aliens.  They've been here a while, don't mind them tho they just monitor and conduct research.

Wed, 05/04/2011 - 18:34 | 1240808 Absinthe Minded
Absinthe Minded's picture

And anal probes! Don't forget about the anal probes.

Wed, 05/04/2011 - 16:17 | 1239972 MrPike
MrPike's picture

It's a tracking cookie.  Go into your browser settings and delete all the cookies if it makes you uncomfortable. It's not likely zerohedge that gave you the cookie either.

Wed, 05/04/2011 - 16:38 | 1240077 RockyRacoon
RockyRacoon's picture

That explains all the bouncing boobies at the top of my web page.

I'm not paranoid after all; they ARE out to get me...

Wed, 05/04/2011 - 16:50 | 1240157 mynhair
mynhair's picture

You wish...

Thu, 05/05/2011 - 10:49 | 1243194 RockyRacoon
RockyRacoon's picture

Aw, shucks....

Wed, 05/04/2011 - 16:23 | 1240002 sabra1
sabra1's picture

i heard umbrella sales are in the dumpster 'cause of rain!

Wed, 05/04/2011 - 16:01 | 1239877 Gene Parmesan
Gene Parmesan's picture

Do we actually have to lay in this bed that "they" made for us?

Wed, 05/04/2011 - 16:04 | 1239897 Dr. Richard Head
Dr. Richard Head's picture

If you do not lay down in the bed you will be labeled a terrorist.  Now go max out your 401K like a good little serf.

Wed, 05/04/2011 - 17:11 | 1240131 Gene Parmesan
Gene Parmesan's picture

I would have yanked my 401k and paid the taxes and penalties or whatever, but I recently found out that my company's is a qualified plan, which means that it's out of reach until I quit or retire. How's that for some shit? The government lets the company deduct the matching contributions as long as there's a clause in the agreement prohibiting us from getting our mitts on our own money when we want to. Now why, pray tell, would the government give two shits about whether or not I cash out and pay my taxes/penalty early? Oh - that's right. None of us are trusted to look after ourselves anymore, what with the death of individual accountability and all. I don't want to think about the other reasons the gov't might want to force people to keep gambling in the markets.

Wed, 05/04/2011 - 17:36 | 1240406 FreedomGuy
FreedomGuy's picture

I am not so sure 401k plans are worth it any more for the reasons you state. It's theoretically OUR money but in reality it is controlled by the State. I cashed out one of my old plans last year, took the taxes up the wazoo but invested about half in metals. Made up all the taxes already. Now it's my money to do as I please.

Wed, 05/04/2011 - 16:03 | 1239905 topcallingtroll
topcallingtroll's picture

No, but it requires the boomers give up something and they wont do it voluntarily.

Dammit I am on vacation and still cant put zero hedge away.

Wed, 05/04/2011 - 16:02 | 1239882 topcallingtroll
topcallingtroll's picture

Thank you boomers for this wonderful debt present.

Except Dexter of course, who has thrown his lot in with gen x,y and millenials.

This would have been a tough winter decade even without all this debt

Wed, 05/04/2011 - 16:06 | 1239907 dexter_morgan
dexter_morgan's picture

+  :-)

Wed, 05/04/2011 - 16:08 | 1239930 cossack55
cossack55's picture

It goes way beyond the boomers. IMHO, back to Jackson who had the guts to kill the last central bank.  All down hill since he left office.  I am certainly down with the Guy Fawkes solution.  I always at least try to cleanup my own mess.

Wed, 05/04/2011 - 17:09 | 1240273 strannick
strannick's picture

"you (bankers) are a brood of vipers and I intend to rout you out, and by the immortal God, I will rout you out!"

and he did. now there was a man.

Wed, 05/04/2011 - 16:23 | 1239963 Sophist Economicus
Sophist Economicus's picture

Every generation has to bear its own special cross

I had to deal with seeing commercials for the Ice Capades in the 70s or was it the 80s...


EDIT:  And, BTW, If i start seeing pictures of Dorothy Hamil showing up in banner ads, I'll know there is more than adSense cookie snffing going on  ;)

Wed, 05/04/2011 - 16:38 | 1240090 RockyRacoon
RockyRacoon's picture

We'll just give you another Great War!  That'll fix everything.

Look how the U S recovered from WWII.  And did you see how much debt was accumulated then?   War is the answer.  

What was the question again?  Alzheimer's is a bitch.

Wed, 05/04/2011 - 16:50 | 1240159 Sudden Debt
Sudden Debt's picture

Like in Japan now, people where buying the war bonds.

We don't need a war.

They just need to find a way to make people dump their money in the wasteland of government debt.

Why? Because it's cool to own worthless bondpaper. What will your friends say if you don't buy it?

Sooner or later, it will come to that.



Wed, 05/04/2011 - 16:46 | 1240134 Sudden Debt
Sudden Debt's picture

I wonder how the youngsters will cope with this.

We still had enough time to accumulate money and reserves. They have to start low and hope mom and daddy can chip in to build something.

I now hear that people need to pay over 370K for a average house over here. That's 1850euro in monthly downpayments for a normal house.

When I see how much my assistants make, no way in hell they can buy that. They can only buy a chack which used to be the homes of the poor 20 years ago and still have a hard time to make ends meet.

I'll make sure my kids get a house before they start. I'll even give them their first car. And I always, constantly will remind them that debt is just evil.

I wonder how a 18 year old must feel now if he has to enter the jobmarket without the proper education.

Even the 22 years old who do.

It's pretty sad.


Wed, 05/04/2011 - 17:14 | 1240297 Andy_Jackson_Jihad
Andy_Jackson_Jihad's picture

Do what they have for the last 2 decades?  Turn their hat backwards/sideways/whatever black people are doing and turn on MTV.

Wed, 05/04/2011 - 16:04 | 1239895 ivars
ivars's picture


Do NOT follow this link or you will be banned from the site!