Oftentimes, academic research is commissioned to support policy.
It is no different in economics and finance, where most of the reports coming out of the Federal Reserve, the International Monetary Fund or think tanks such as the Council on Foreign Relations support the new normal modus operandi of low interest rates, deficit and credit card spending.
Not so the 16th annual Geneva Report, issued by the International Centre for Monetary and Banking Studies and written by a couple of bankers and former central bankers.
Since bankers love debt and central bankers can’t seem to stop printing money, you will be surprised by this report. It is a rational critique of excess debt levels and the costs associated with money printing and low interest rates. It also explains why there is so much debt in the first place.
No Deleveraging
The first important finding is that total debt levels in the world (public, corporate and household) are still increasing and now stand at 215 percent of world GDP.
So the world is happily continuing to lever up instead of deleveraging, which means paying down debt. Quite fittingly, the report is called “Deleveraging? What Deleveraging?”
