We knew that credit expansion is the mother’s milk of economic growth, but even this chart surprised us. The global nominal private non-financial debt level x/ China has been flat since 2008. As in flat in nominal terms not as a percent of world GDP!
Explains the weak recovery in the U.S. and the rest of the west.
Could the data in the chart be about to change and we are in the midst of a global private credit impulse, which is driving global growth expectations higher? Could there be a measurement problem? We suspect much of the flat growth in private debt is a reduction in mortgage debt in the United States.
Hat Tip: Tuomas Malinen