The simplest most important chart in the world?


With global economic data and markets on edge, and central banks feverishly at work to keep their decade of emergency level policy and recovery intact, here’s a simple but important picture.

h/t gnseconomics.com

What it shows is a decade of the greatest country credit expansion in history. With China now the 2nd largest in the world, this planned economy has grown GDP by several trillion US$ but with over $25 trillion of new debt.

Behind the lines it shows how massive infrastructure spend drove new global demand for commodities from everywhere and how China became the largest car market and largest exporter of finished good in the world. It shows how they rolled out new cities with plans to fill them.

But if debt pulls future economic growth forward, it also shows that growth is and likely will be increasingly challenged.

What it doesn’t show are the unintended consequences of such an expansion, excess capacities and a growing but maybe still really unknown number of non-performing loans.

What it also doesn’t show is that China accomplished whatever this decade became, their boom, with the tailwind of every major central bank, certainly the Fed/ECB/BoJ, experimenting feverishly with stimulative policy only to deliver an extended but low growth recovery of their own.

There is much to worry about in the financial world right now. EU bank stability in their negative interest rate world, Brexit, the HK situation, seemingly a shortage of global USDs, regional housing bubbles, a brewing trade war. Global economic numbers are rolling over and many yield curves are inverted. There’s a slowdown upon this world of central bank induced excess.

So now what does this planned economy, the greatest credit expansion in history, got planned?