We couldn’t pass up the opportunity to see Carmen Reinhart, a professor of the International Financial System, Harvard Kennedy School, and author of the book “This Time is Different: Eight Centuries of Financial Folly” speak live at the Chicago Council on Global Affairs this week. Given she was apart of the advisory board of the New York Fed, we were intrigued to hear her insight. With her focus specifically on various crises, whether that be currency, bonds, equities, or commodities. Instead of trying to paraphrase her speech, she seemed just the person to highlight on the blog. Instead of paraphrasing her entire speech, we decided to highlight the charts we found interesting, given this current environment of “hold on and wait” regarding interest rates.

Debt

While it’s not at its highs during the 2008-2009 crisis, debt as a percent of GDP is still at its highs.

gross-total-debt-as-percent-of-gdp

So has Public Debt…

public-debt

[drizzle]Reinhart explained this is due to the 2008-2009 financial crisis. Private debt became public debt after the crises, and the public assumed the debt of the banks.

Negative Interest Rates

We wrote about the unprecedented dominance of negative interest rates in the global economy, but Reinhart argues this isn’t unprecedented. If you adjust rates for inflation we’ve seen this before, at least for short-term rates.

short-term-rates-negative-rates

Digger deeper, we can see the numbers of advanced countries that have used to be and  are currently are operating with negative interest rates.

negative-short-term-interest-rates_1

Emerging Markets

emerging-markets-60-percent-of-world-gdp

china-2014-gdp-debt

Oil

fuel-oil-producers

To see her full presentation as well as her proposed solutions to debt and the global economy, click here.

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