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Commentary. Debt was the cause of the Great Depression—yet the remedy has consisted of administering the same poison in even higher doses, though in various forms.

Stocks are soaring—so why is the global economy so fragile?

The year 2017 has been great for the global stock markets, and the start of the current year seems to be confirming this trend. Optimism and exuberance are now undeniable features, and most of the financial operators believe that the positive cycle will continue for the next three years.

Inflation remains low, so central banks are tamping down their monetary normalization projects, and even investments seem to be recovering.

The U.S. stock exchange has been on a continuous growth streak for the past 14 months. Topping it all are Trump’s pro-business and pro-enterprise political and fiscal choices, which are signaling the presence of the conditions for a phase of further expansion.

Furthermore, in 2017 the global capitalization of the stock exchanges has been greater than the global GDP.

Only in 2007 has the former ever surpassed the latter. This is to say that the sphere of finance, even only in its narrowest and most official dimension, is larger, in absolute terms, than the real economy.

Despite all this, The Economist is still presaging a phase of “secular stagnation” and “chronically weak growth.”

The fear is tied not so much to the still-uncertain stabilization as to the way it has been accomplished. The monetary policy of central banks has led to an irresistible push to raise debt. Not very surprisingly, debt was itself the cause of the Great Depression of 2008—yet the remedy has consisted of administering the same poison in even higher doses, though in various forms.

All the reports from the last 10 years have confirmed the growth in global debt.

The latest such report is this January’s Global Debt Monitor, compiled by the Institute of International Finance, which states that, in the third quarter of 2017, global debt (i.e. the sum of the private and public debt) has arrived at the incredible figure of $233 trillion, an increase in absolute terms of as much as $16.5 trillion from 2016.

If we analyze the last 10 years, overlapping for the most part with the period that started with the Lehman Brothers crisis, the increase amounts to $71 trillion.

It is enough to recall that the global annual GDP stands at roughly $77-78 trillion to understand how the turbocharged finance sector has been the scaffolding upon which the whole system has been restarted.

In fact, the ratio of debt to global GDP decreased in 2017. But the trend of the different types of debt is not consistent.

In mature countries, sovereign debt has increased while private debt has decreased, while in many emerging countries there has been an increase in both.

This trend gives an accurate measure of the ongoing processes. It is not the real economy holding these debts—they are all increasing through financial devices and a debt explosion.

Indeed, the real economy is on the upturn only as a side effect of the restart of the turbocharged financial sector.

China represents an important example in this regard. The newspaper Sole 24 Ore recently ran a story to the effect that China’s economic growth ”is resting on a vast, endless wall of debt.”

Taking into account the difficulty in finding wholly reliable data, the image of China that emerges is that of a massive growth of private consumption-oriented debt, which has increased no less than 35 times over in the past two years alone. Certainly, we are still talking of rather small numbers in absolute terms, but it gives a sense of the direction of a current development model.

We have to add bad loans to the mix, about which there has been much talk in Italy’s case, which amount to over $250 billion.

Finally, there is public debt, which official estimates indicate at more than $4.6 trillion, a number which, however, does not include the myriad debts of the local authorities which help sustain the economy.

In total, according to government figures, the aggregate debt, including that held by government, businesses and private citizens, amounts to no less than 257 percent of GDP.

In the end, the current growth is founded on a bet on the future—but who will win it?

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