The developed world’s Ponzi scheme is caused by record-high levels of public and private debt. As Boston Consulting Group notes, it is. “The developed world’s Ponzi scheme is caused by record-high levels of public and private debt. And it is exacerbated BCG: Ending the Era of Ponzi Finance. Ending the Era of Ponzi Finance Stelter of the Boston Consulting Group that examines the magnitude of the challenge facing the The greater the weight of speculative and Ponzi finance, the smaller the overall margins of.

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The incomes of the lowest quintile grew by only 18 percent. As bad as the excessive debt burden is, however, it is only part of the problem. During the past several years, we have spent a great deal bgc time focusing on the problem of excessive debt.

Government will have to get smaller and more efficient.

The Ponzi scheme will have to be unwound. But instead of investing the money to buy the coupons and exchange them for stamps, he simply used the money of later investors to pay high returns to earlier investors, extracting huge profits along the way.

Well, what happens when you have fewer younger people than older people? How much money are we talking about? In recent decades, however, the vast majority of debt has not been used to increase future income but to consume, to speculate in stocks and real estate, and to pay the interest on previous debt.

He attracted investors by ensing extraordinarily high returns—50 percent within 45 days.


BCG report: Ending the Era of Ponzi Finance | Consultant’s Mind

By the end of this century, there will be at least a 50 percent dependency ratio in most developed countries. Given the importance of the quality of capital stock to productivity and economic growth, it is time to reverse this trend. Select a Tag featured But it has also contributed to tougher international competition and the creation of new inequalities of wealth and income in the developed world.

We recommend that independent professional advice is hhe before you make any investment lf trading decisions. Creditors will have to accept losses. Rather, he argues that the space for truly fundamental innovations that result in step-change improvements in living standards is getting finace and smaller. By investing in a growing and highly productive workforce and making it easier for engineers and technologists to innovate and for entrepreneurs to start new businesses, the developed economies need to unleash a new Kondratiev wave of global economic development.

BCG – Ending the Era of Ponzi Finance Economist American Debt | Consultant’s Mind

In real terms, after inflation is taken into account, governments have more than four times, private households more than six times, and nonfinancial companies more than three times the debt they had in The Boston Consulting Group even went so far as to call it the biggest Ponzi finance scheme in history.

Via Boston Consulting Group: Disguised unemployment and early retirement however only shift the debt burden back to the state, and guarantee that future economic growth will be weak or zero. Completely the opposite of anything that Ben Bernanke, Mario Draghi and their lookalikes feel obliged to say, economic system wide productivity is rapidly turning from bad to worse, year-in and year-out.

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I do so deliberately to emphasize the scope and seriousness of the problem. Addressing these challenges at any time would be difficult.

But leaders from all social sectors—government, business, organized labor, environmental and other stakeholder groups—need to act decisively and quickly in order to secure future economic prosperity, social cohesion, and political stability. Developed economies are in enormous debt. Another way of looking at this estimate is to take those amounts as debt that can never, ever be repaid and should be “forgotten”.

Increasing differences in education within the countries of the developed world are an additional burden. The wealthy will have to pay more taxes. On balance, it makes sense to assume structurally higher raw-material prices, endng constant and high volatility in the economic cycle.

endint Our only hope is that the asset used to try paying down the ever-growing debt bubble – this “asset” is the entire economic system – can grow and will grow faster than the total debt financing cost. Meanwhile, private households have relied too long on rising home-asset prices and the promises of politicians and corporate managers instead of putting aside dedicated funds for retirement. The era Italian immigrant to the US named Carlo Ponzi created the scheme the world remembers, like the bigger and better scheme of Bernie Madoff which foundered in The developed world faces a day plnzi reckoning.

Prepare for labor scarcity. Systemic issues require a strong dose of political will and leadership.