{"id":12760,"date":"2019-06-26T11:28:02","date_gmt":"2019-06-26T09:28:02","guid":{"rendered":"https:\/\/proacomunicacion.es\/?p=12760"},"modified":"2019-06-26T11:28:02","modified_gmt":"2019-06-26T09:28:02","slug":"rising-debt-and-public-spending-and-excess-liquidity-slow-growth-in-global-economies","status":"publish","type":"post","link":"https:\/\/proacomunicacion.es\/en\/el-aumento-de-la-deuda-y-el-gasto-publico-y-el-exceso-de-liquidez-ralentizan-el-crecimiento-de-las-economias-globales\/","title":{"rendered":"Rising debt, government spending and excess liquidity slow growth in global economies"},"content":{"rendered":"

Daniel Lacalle, economic advisor to the Popular Party, recently spoke at a forum on Investment Keys<\/em><\/strong> organised by El Espa\u00f1ol, where he gave his views on the present and future macroeconomic scenario in global economies.<\/p>\n

The current scenario is characterised by the poor pace of economic growth, as a consequence of what Lacalle calls \"financial repression\", which replaces investment with indebtedness and public spending. This scenario provokes the \"Japanisation\" of the economy, that is to say, the \"Japanisation\" of the economy, recurrently low growth and inflation with historically low interest rates<\/strong>which create a dynamic from which it is difficult to escape. A scenario that caused, for example, the Nikkei index to fall from around 40,000 points to 13,000 in a few years.<\/p>\n

Debt saturation<\/strong><\/em><\/p>\n

According to Lacalle, this is despite the fact that the recession indicators have moderated<\/strong>. Because current growth relies exclusively on the policies of central banks and governments, which focus solely on increasing public spending and borrowing.<\/p>\n

In his view, this does not address the bottom line, which is the fact that investment decisions and industrial production have fallen. Therefore, debt saturation does not generate growth<\/strong>.<\/p>\n

The figures bear this out. The global money supply has now reached its record level of 74 trillion dollars. But this is not conducive to growth. On the contrary, it is an excess of liquidity that leads to low and uneven growth, because it does not come from capital investment but from the recycling of capital. It is an inefficient growth model.<\/p>\n

Financial repression\" (continued expansionary monetary policies), while curbing downturns in the business cycle, perpetuates imbalances and increases debt. The strategy of continuously injecting liquidity boosts the value of ultra-cyclical assets<\/strong> (more linked to the cycle), but when these injections are cancelled, they collapse.<\/strong>. It is therefore not an effective strategy according to Lacalle.<\/p>\n

Why is growth so poor?<\/em><\/strong><\/p>\n

Lacalle explains that the current low level of growth is due to three factors:<\/p>\n