{"id":20249,"title":"10 Years after Lehman – Is an Economic Crisis on the Horizon? (Part 2)","link":"https:\/\/bst-europe.eu\/de\/globalization\/10-years-after-lehman-is-an-economic-crisis-on-the-horizon\/","date":"5. September 2018","date_unix":1536127213,"date_modified_unix":1584457913,"date_iso":"2018-09-05T06:00:13+00:00","content":"
\"Freddie<\/a>
Freddie Collins \/ Unsplash \u2013 Unsplash License, https:\/\/unsplash.com\/license<\/figcaption><\/figure>\n

In the last blog<\/a>\u00a0I showed what the basic pattern of serious economic crises looks like. In the past, such economic slumps were often triggered by a burst of speculative bubbles. In this post you get insights on the prerequisites of speculative bubbles.<\/em><\/p>\n

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An important prerequisite<\/strong> for a speculative bubble – high liquidity – is undoubtedly there. Worldwide, central banks have dramatically increased<\/strong> the global money supply. One indicator of this is the development of the balance sheet total of the central banks: between 2002 and 2016, the global balance sheet total of the central banks increased by a factor of 5.6, with the value of global GDP increasing only slightly more than twice in this period (see Figure 1).<\/p>\n

\"Teil<\/a><\/p>\n

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Triggering an Economic Crisis: Speculative Bubbles<\/h2>\n

If the money supply grows faster<\/strong> than the quantity of goods and services, this should actually raise inflation<\/strong>. In fact, however, we see only slight increases in consumer prices in the major industrial nations. The money made available by the central banks did not flow into the commodity markets but into the markets for assets (shares, securities, real estate, etc.).\u00a0That’s where speculative bubbles build up.<\/strong><\/p>\n

At the same time, debt is increasing<\/strong> worldwide: in 2001 (the year in which the dotcom bubble burst) the debts of private and public economic actors corresponded to around 184 percent of global GDP. In 2016, these debts rose to 217 percent of the world’s GDP (see Figure 2). This is not surprising either: With their money increase, central banks want private households and companies to get into debt. The purchases of goods financed by loans increase the demand for goods and services and thus stimulate the economy.<\/p>\n

\"Teil<\/a><\/p>\n

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Is an economic crisis building up?<\/h2>\n

All in all, there are many indications that speculative and credit bubbles are building up worldwide<\/strong>.<\/p>\n