by Chris Martenson

In parallel with exponential population growth, our monetary system is also exhibiting exponential behavior. Consider this evidence:

1) Money supply growth (see chart above). It took us from 1620 until 1973 to create the first $1 trillion of U.S money stock (measured by adding up every bank account, CD, money market fund, etc). The sum of all the roads, factories, bridges, schools, and houses built, together with every war fought and every other economic transaction that ever took place over those first 350 years, resulted in the creation of $1 trillion in money stock [1]. The most recent $1 trillion? That has been created in only 4.5 months. The dotted line in the chart is an idealized exponential curve, while the solid line is actual monetary data. The fit is nearly perfect (with a correlation of 0.98 for those interested). Data from the Federal Reserve.

2) Household debt has doubled in only seven years, growing from $7 trillion to $14 trillion. It is a stunning turn of events. Have household incomes also doubled in seven years? No, not even close; they have grown less than half as much, calling into question how these loans will be repaid, let alone doubled again. Data from the Federal Reserve.

3) Total credit market debt (that’s all debt) had finally exceeded $5 trillion by 1975, but has recently increased by $5 trillion in just the past two years, and now stands at nearly $50 trillion. In order for the next 20 years to resemble the last 20 years, debt would have to expand by another three to four times, to $150 trillion to $200 trillion. How likely do you think this is? Data from the Federal Reserve.

How do we make sense of money numbers this large and growing this fast? Why is this happening? Could it be that the U.S. economy is so robust that it requires monetary and credit growth to double every six to seven years? Are U.S. households expecting a huge surge in wages to be able to pay off all that debt? If not, then what’s going on?

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