We’re all doomed, part 94

October 12, 2009

If you really want to spook yourself, try this. The sweep of history, courtesy of Dylan Grice of SocGen (he starts with 3rd Century Rome) shows that all fiat money eventually collapses under the weight of its internal contradictions, as politicians struggle to meet promises made under more benign circumstances.

There are some really spooky charts here, showing the real level of government liabilities (rather than merely the actual borrowing) and none of the Western countries looks remotely solvent. Oddly enough Spain comes out best Рor least worst Р with liabilities totalling a mere 250 percent of GDP. The US is joint worst with 550 percent.

Grice comes up with even scarier figures when he calculates the income/liability ratios, which effectively show that Europe and the US have no hope of returning to long-term fiscal stability.

Alas, he gives us no idea of how to protect ourselves from the consequence of fiscal incontinence. Perhaps that’s in his next piece of research. I’ll let you know.


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