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Historic Uk Debt Graph

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Fabulous graph posted by realcrookswearsuits in another thread, showing the UK national debt relative to gdp, since the creation of the BoE.

Now my investing is based on understanding where things are going, and guestimating 'instrinsic value'. I've never traded or given advice based on technical indicators, but having said that I have seen the power of technical indicators. Like when a stock for years is rising above its 200 day moving average, then breaks below well below it.. Watch out. So I use technical indicators as an assist.

So say you saw this graph and had no idea what it represented, what would your first impression guess of where this graph is going be? To me it clearly looks like it has broken up above the secular downtrend. And could up for decades time.

Now of course this fits in with my theory that the national debts in all western nations will grow to over 200% of gdp over the coming decades. This graph looks like a strong technical indicator to back that up.

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Let's see, Pax Britannica, the industrial revolution and the first globalisation helped pay off the debt from the century plus of wars with France, and then Pax Americana the information revolution and the second globalisation helped pay off the debt from two world wars.

I suppose if it gets out of hand we can hope for Pax ...., the genetic, nano and AI revolutions and the first interstellarisation to pay off the debt from crass conspicuous consumption.

Don't forget we will hit a global demographic wall in a few decades. Best to be prudent.

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I also wanted to add some math showing how it might take longer than you think to get to 200% of gdp as the national debt. So say the country has a national debt of 80% of gdp, and it is running a 12% of gdp a year deficit. So it should take 10 years to get to 200% of gdp right? Well no, because there are other factors.

If you look over the last 30 years, on average we ran an inflation of 3%. And for arguments sake lets say real economic growth is 2%. 1.5% productivity improvement and .5% population growth. Well that means in nominal terms the economy is growing at 5% a year. That nominal 5% a year increase, significantly diminishes debt taken out say 15 years ago.

Ok this is interesting I just ran the scenario out for 10 years. Our country starts at 80% of gdp debt, runs a 12% of gdp deficit for 10 years.. and has the 5% nominal gdp increase. So what is the national debt of the end of the 10 years? 149% of gdp.

See it will take awhile to get up to 200% of gdp, even running huge deficits.

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Let's see, Pax Britannica, the industrial revolution and the first globalisation helped pay off the debt from the century plus of wars with France, and then Pax Americana the information revolution and the second globalisation helped pay off the debt from two world wars.

I suppose if it gets out of hand we can hope for Pax ...., the genetic, nano and AI revolutions and the first interstellarisation to pay off the debt from crass conspicuous consumption.

Don't forget we will hit a global demographic wall in a few decades. Best to be prudent.

There is a bunch of revolutions coming in 25-45 years from now. We probably will see human intelligence level robots by 2040. Then we can have pretty much an unlimited workforce that goes around the clock. The auto industry is almost there already.

Another on the horizon is reversing aging. With a large combination of therapies to repair age related damage, to clean out accumulated crap, to rejuvinate organs. I'm not sure what impact that would have on debt and the economy. If it was likely you would live to 1000, maybe you would take out a 200 year loan for your house?:) And probably be working in a non-job, barely making your payments every month.

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There is a bunch of revolutions coming in 25-45 years from now. We probably will see human intelligence level robots by 2040. Then we can have pretty much an unlimited workforce that goes around the clock. The auto industry is almost there already.

Another on the horizon is reversing aging. With a large combination of therapies to repair age related damage, to clean out accumulated crap, to rejuvinate organs. I'm not sure what impact that would have on debt and the economy. If it was likely you would live to 1000, maybe you would take out a 200 year loan for your house?:) And probably be working in a non-job, barely making your payments every month.

I agree age halting/reversing is the big goal of biotech now. We come from nothing...2 cells, we grow and generate healthy new cells till we hit our teens, then for about a decade we don't age, our organs and other tissues/bones regenerate and keep us at an equitable status quo. These are all processes regulated by our genes and telomeres. Once we learn how to control this properly, we've cracked it. You could go to Univeristy many times in your life, have different careers, have several families...provided you can affod the therapies. Also, I believe there would have tobe some sort of population control, a condition attached to the use of the drug that you will sterilise yourself after two children.

I think if you are 40 or under now, there is a chance you will benefit from this new technology before it's too late. I anticipate it will be a minimum of 30-50 years away, what with trials etc. Dying of old age will be viewed as a disease, and those who are at most risk of dying of age will be allowed to go on to trials for compassionate use.

Personally, I'm not sure how long I'd want to live. I believe in the after life, which I think will be an even greater adventure, so moving on to that stage would be something I wouldn't want to put off forever.

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I agree age halting/reversing is the big goal of biotech now. We come from nothing...2 cells, we grow and generate healthy new cells till we hit our teens, then for about a decade we don't age, our organs and other tissues/bones regenerate and keep us at an equitable status quo. These are all processes regulated by our genes and telomeres. Once we learn how to control this properly, we've cracked it. You could go to Univeristy many times in your life, have different careers, have several families...provided you can affod the therapies. Also, I believe there would have tobe some sort of population control, a condition attached to the use of the drug that you will sterilise yourself after two children.

I think if you are 40 or under now, there is a chance you will benefit from this new technology before it's too late. I anticipate it will be a minimum of 30-50 years away, what with trials etc. Dying of old age will be viewed as a disease, and those who are at most risk of dying of age will be allowed to go on to trials for compassionate use.

Personally, I'm not sure how long I'd want to live. I believe in the after life, which I think will be an even greater adventure, so moving on to that stage would be something I wouldn't want to put off forever.

Good points. I think going back to university would be big with aging cured. When I think about it if you read history from like 1800 its amazing how many children never made it into adulthood. Like 50% of children died before the age of 5. And people were dropping dead all the time, like in childbirth. It had to impact the thinking of time horizon.

One example I've been reading about that decades from now could have a big impact is to do with adult stem cells. There are over 200 types of adult stem cells in the body, so this was just one type. And the scientists extracted the adult stem cells and already had a way to reset the telomeres in them. With dna testing then you find the most healthy adult stem cells. which there are still some left even in 80 year olds. Then in a bioreactor hundreds of millions of copies are made of these young, healthy stem cells. And then injected back into the patient, throughout the organ. Over the following months and years those young healthy stem cells replace older cells with young versions, the reset telomeres and undamaged dna.

The cost of treatment could be very extreme, but then again if successfully rejuvinated the person would have a new lifetime to payback the money. And like cell phones advancing with each generation.. by the time the person was ready to be rejuvinated again it would likely be far cheaper and easier process.

Its another example why more and more of the economy is going to be health related. Already in the USA health spending is something like 17% of gdp.. bigger than housing now.

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uk_debt_300.png

Fabulous graph posted by realcrookswearsuits in another thread, showing the UK national debt relative to gdp, since the creation of the BoE.

Now my investing is based on understanding where things are going, and guestimating 'instrinsic value'. I've never traded or given advice based on technical indicators, but having said that I have seen the power of technical indicators. Like when a stock for years is rising above its 200 day moving average, then breaks below well below it.. Watch out. So I use technical indicators as an assist.

So say you saw this graph and had no idea what it represented, what would your first impression guess of where this graph is going be? To me it clearly looks like it has broken up above the secular downtrend. And could up for decades time.

Now of course this fits in with my theory that the national debts in all western nations will grow to over 200% of gdp over the coming decades. This graph looks like a strong technical indicator to back that up.

And what's the equivalent for personal and corporate debt?

You need to consider TOTAL debt to have propoer relevance.

And have you taken into account future liabilities - public sector pensions, PFI etc? If you do so then public debt is already over 200%.

And have you noticed what the other public debt spikes were caused by?

Napoleonic Wars

WWI

WWII

Have we been fighting a world war recently?

All our debt has caused is unaffordable housing.

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There is a bunch of revolutions coming in 25-45 years from now. We probably will see human intelligence level robots by 2040. Then we can have pretty much an unlimited workforce that goes around the clock. The auto industry is almost there already.

Another on the horizon is reversing aging. With a large combination of therapies to repair age related damage, to clean out accumulated crap, to rejuvinate organs. I'm not sure what impact that would have on debt and the economy. If it was likely you would live to 1000, maybe you would take out a 200 year loan for your house?:) And probably be working in a non-job, barely making your payments every month.

Here's another scenario. Those who run the world allow us slaves our bread and circuses because it suits them. When robots become more economical than slaves, what happens to the slaves? The only consumers will be the wealthy.

Perpetual youth may well be available, but only for those that can afford it. And the robots.

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uk_debt_300.png

Fabulous graph posted by realcrookswearsuits in another thread, showing the UK national debt relative to gdp, since the creation of the BoE.

Now my investing is based on understanding where things are going, and guestimating 'instrinsic value'. I've never traded or given advice based on technical indicators, but having said that I have seen the power of technical indicators. Like when a stock for years is rising above its 200 day moving average, then breaks below well below it.. Watch out. So I use technical indicators as an assist.

So say you saw this graph and had no idea what it represented, what would your first impression guess of where this graph is going be? To me it clearly looks like it has broken up above the secular downtrend. And could up for decades time.

Now of course this fits in with my theory that the national debts in all western nations will grow to over 200% of gdp over the coming decades. This graph looks like a strong technical indicator to back that up.

That chart you posted shows the public debt (gov.). When one says "national" debt it is not clear if it means the nation (Gov.+companies+households) or just the government's debt.

This "global" crisis was mainly caused by a credit bubble, mainly in the USA and UK household sectors. The UK and Japan have the highest total debt in the world. (Unfortunately the charts below do not include the financial sectors. Important for countries such as the UK and Ireland.)

____________________________________________________________________________________________

Bank for International Settlements (BIS) report.

UK Total Debt (Gov.+ Households + Companies) / GDP still going up.

(IMO only partially explained by the UK GDP reduction of around 5% since the crisis IIRC.)

First solid data that I am aware of since the McKinsey report showed total debts up to 2008. This BIS report comes all the way to 2010.

Thread in the forum main section: http://www.housepricecrash.co.uk/forum/index.php?showtopic=153952&view=findpost&p=2771813

Source: http://www.bis.org/publ/qtrpdf/r_qt1009e.pdf

debttogdp2010.png

Edited by Tired of Waiting

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And what's the equivalent for personal and corporate debt?

You need to consider TOTAL debt to have propoer relevance.

And have you taken into account future liabilities - public sector pensions, PFI etc? If you do so then public debt is already over 200%.

Indeed. Neither do those figues include PFIs or bank bailouts.

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I can see a space travel boom over the course of this century and remember how quickly airplanes developed from the 1910s to the 1950s, not a huge space of time from a historical perspective. And AI could help in the development of space travel.

Edited by Big Orange

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That chart you posted shows the public debt (gov.). When one says "national" debt it is not clear if it means the nation (Gov.+companies+households) or just the government's debt.

This "global" crisis was mainly caused by a credit bubble, mainly in the USA and UK household sectors. The UK and Japan have the highest total debt in the world. (Unfortunately the charts below do not include the financial sectors. Important for countries such as the UK and Ireland.)

Yes this was a private credit bubble and blow up. Not a sovereign debt crisis. Ireland went into the crisis one of the healthiest sovereign balance sheets in the world. National debt only 21% of gdp, and running a budget deficit under 3% of gdp. And running a trade surplus.

2 years later the country blew up and is being kept on life support by the EU and IMF. Because it put a sovereign guarantee on all the private debts. Which was 900% of gdp.

Britain went into the crisis with a national debt of only 45% of gdp. Even with all the unfunded liabilities I still say that is quite low by historic standards.

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Yes this was a private credit bubble and blow up. Not a sovereign debt crisis. Ireland went into the crisis one of the healthiest sovereign balance sheets in the world. National debt only 21% of gdp, and running a budget deficit under 3% of gdp. And running a trade surplus.

2 years later the country blew up and is being kept on life support by the EU and IMF. Because it put a sovereign guarantee on all the private debts. Which was 900% of gdp.

Britain went into the crisis with a national debt of only 45% of gdp. Even with all the unfunded liabilities I still say that is quite low by historic standards.

the main reason theyve blown up is because they were reliant on the tax income generated by the take on of private debt, the bank bailouts were effectively returning those taxes generated out of the ponzi debt, ie a private credit bubble is the same as a sov credit bubble to all extents, they are interchangable

Edited by Tamara De Lempicka

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the main reason theyve blown up is because they were reliant on the tax income generated by the take on of private debt, the bank bailouts were effectively returning those taxes generated out of the ponzi debt, ie a private credit bubble is the same as a sov credit bubble to all extents, they are interchangable

Pretty much.

Also the rebalancing of public accounts becomes more difficult, as the private sector is overburdened with debt, and consequently the economic recovery (and fiscal rebalancing) are very slow - think Japan.

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<snip>

Its another example why more and more of the economy is going to be health related. Already in the USA health spending is something like 17% of gdp.. bigger than housing now.

And what is life expectancy in the US? The US is in 36th or 34th place in the worldwide rankings (depending on whether you use the UN's figures or the CIA's figures).

It spends the most of any country in the world on health - $6,103 per person per year.

Our old friend Iceland, which is 3rd or 11th, spends $3,323.45 per person per year. Australia, which is 5th according to both lists, spends $3,353 per person per year.

Expenditure on health in the US is enormously inefficient.

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the main reason theyve blown up is because they were reliant on the tax income generated by the take on of private debt, the bank bailouts were effectively returning those taxes generated out of the ponzi debt, ie a private credit bubble is the same as a sov credit bubble to all extents, they are interchangable

There is truth in that. Of course both sovereign debt and private debts are related to the central banks task of controlling inflation. If we had seen a much more modest rise in private debt, surely the nations would have been in serious deflation. There has been a slowing velocity of money since the 70's.

The central banks also decided not to expand the high powered debt free money in the system.

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And what is life expectancy in the US? The US is in 36th or 34th place in the worldwide rankings (depending on whether you use the UN's figures or the CIA's figures).

It spends the most of any country in the world on health - $6,103 per person per year.

Our old friend Iceland, which is 3rd or 11th, spends $3,323.45 per person per year. Australia, which is 5th according to both lists, spends $3,353 per person per year.

Expenditure on health in the US is enormously inefficient.

Yes the US spends incredible amounts to keep people alive for a few more weeks. Or keeping severely sick premature babies alive - while other nations like France pull the plug. In addition the US has profiteers like doctors making excessive amounts of money, lawyers in there and insurance companies being middle men.

I still think health spending will rise as a proportion of gdp in all the western nations. Like Austria in 1970 spent 5% of gdp on health, in 2007, 10%. The UK which spends about the least of any western country, spent 4.5% in 1970, in 2007 8.5%.

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I was plugging away on some calculations and came to a shocking conclusin It appears if we have the nominal size of the economy expand at 6% a year, (2.5% productivity, 0.5% population growth and 3% inflation..

that we can run a budget deficit of 12% of gdp forever

Once you get to a national debt of 200% of gdp.. then the 6% nominal growth in gdp exactly cancels out the 12% deficit. So the national debt remains at 200% of gdp for the next year.

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Firstly, the 'public debt' is only half the story. All sorts of other liabilities are covered by the taxpayer thanks to both parties PFI and PPP initiatives, and greatly increased with Gordons socializing of all bad banking debts.

This chart gives a far more accurate figure, about 475% and other than maybe Japan, the highest in the developed world.

mckinsey-international-debt-chart.gif

Secondly, its primarily the deficit, not the debt that worries people about the UK. A 13-14% deficit is far larger than all similar sized economies, and far larger than any budget deficit in our post war history.

That is to say its the rate of growth of the debt in the UK, rather than the existing level of debt that scares peoples.

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Firstly, the 'public debt' is only half the story. All sorts of other liabilities are covered by the taxpayer thanks to both parties PFI and PPP initiatives, and greatly increased with Gordons socializing of all bad banking debts.

This chart gives a far more accurate figure, about 475% and other than maybe Japan, the highest in the developed world.

mckinsey-international-debt-chart.gif

Secondly, its primarily the deficit, not the debt that worries people about the UK. A 13-14% deficit is far larger than all similar sized economies, and far larger than any budget deficit in our post war history.

That is to say its the rate of growth of the debt in the UK, rather than the existing level of debt that scares peoples.

Great find Sadman. This chart looks like an updated version of that famous Mckinsey chart - according to Peston, the "talk of the town" in Davos, almost a year ago. But that one covered only until 2008.

Do you have a link to the source please?

Cheers,

Edit: Davos is in January, isn't it? Is Mckinsey trying to repeat their 2010 success? Do they have a new report out? Free, online?

.

Edited by Tired of Waiting

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I'm not sure these sovereign or national debt stats. are as meaningful as they at first appear given we're now in a globalised world (largely) without currency and capital controls.

You'd really need to net off debts against the balancing assets on other sovereign/national b/sheets and private corporations to get the big picture.

As Hotairmail likes to point out - it's really about imbalances not absolutes.

One man's liability is another man's asset. :)

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Secondly, its primarily the deficit, not the debt that worries people about the UK. A 13-14% deficit is far larger than all similar sized economies, and far larger than any budget deficit in our post war history.

That is to say its the rate of growth of the debt in the UK, rather than the existing level of debt that scares peoples.

People are scared about he 13-14% deficit because it is so different than what they are used to. But when I do the calculations it appears sustainable. For example at a 12% budget deficit and 6% nominal gdp growth a year.. the national debt will never exceed 200% of gdp.

The whole story is exactly what you said, the private and public debts. And as the private sector deleverages the national debt has to grow to compensate.

The PFI type of liabilities, I'm not sure how to factor those.. or if those were factored in the past into the debt. So when the debt was 200% of gdp back in the 1800's, I'm not sure if there was off balance sheet PFI type of liabilities in addition.

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  • 276 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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