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National Debt, GDP, & M1 Money Supply

National Debt, GDP, & M1 Money Supply of the four global power houses, US, China, Russia, & Japan.

 

 

By the end of this read, you will know the ratios of DEBT/GDP risk and the total gold held in treasury versus their M1 money supply.

Firstly, let's look at each item:

National Debt: The total money a government owes to entities such as central or global banks, the IMF, foreign governments, and companies. The national debt also includes interest payments.

GDP (Gross Domestic Product): The total value of goods and services produced in a country. It's akin to adding up all the price tags of cars, food, computers, minerals like gold or oil, produced by a country, and determining the country's wealth.

M1 Money Supply: M1 money supply includes physical cash, coins, and demand deposits (like checking accounts) easily accessible for spending. It does NOT include term deposits. M1 represents liquid cash.

 

National Debt

NATIONAL DEBT / GDP

It's no secret that the US is indebted up to their eyeballs and continues to add to their national debt by funding interest on the debt (yes, you read that right. They borrow to pay interest on the debt they already have), defense & wars, bonds, public infrastructure, healthcare, economic stimulus, and much more.

DEBT / GDP is a calculation used to understand the health of a country, or a company for that matter. The lower the DEBT/GDP ratio, the healthier the balance sheet; vice versa, the higher the ratio, the riskier the balance sheet. A debt-to-GDP ratio over 100% suggests that the country is heavily indebted relative to its economic output. This can be a concern because it indicates the country might struggle to pay off its debt without significant economic growth or changes in fiscal policy.



Russia

The national debt stands at $425.7 billion US dollars, with a GDP of $2.192 trillion US dollars. Russia is a powerhouse when it comes to resources like energy, in terms of oil and gas. It's also rich in precious metals and is one of the largest exporters of military equipment. Furthermore, it's a major producer of agriculture and manufacturing goods.

The GDP value of the country is 5.15 times their national debt, resulting in a DEBT/GDP ratio of 19.4%.

 

China

National Debt: $14.4 trillion US dollars.
GDP: $17.6 trillion US dollars.
DEBT/GDP ratio: 81.8% - Despite the high ratio, China continues to outproduce its debt. However, a looming risk is its declining population, with analysts forecasting a halving by 2050.

 

 

Australia - Let's look at our backyards ratio!

National Debt: $1.2 trillion US dollars.
GDP: $1.8 trillion US dollars (Phewww ~ wipes sweat~)
DEBT/GDP ratio: 66.66% - The three factors to consider here are our rich resources in iron ore, gold, coal, and natural gas, immigration/international students, and beef and agriculture.

 

 

Now we look at the higher risk countries.

United States of America - The USA, the big shot on the global stage, flaunting its currency like it's the coolest kid in school. But guess what? That flashy currency comes with a surprise accessory - a hefty ball and chain strapped to its ankles!

National Debt: $34.76 trillion US dollars.
GDP: $28.43 trillion US dollars.
DEBT/GDP ratio: 122.2% - As stated above. "A debt-to-GDP ratio over 100% suggests that the country is heavily indebted, ...country might struggle to pay off its debt". 

 

 

Japan

National Debt: $14.42 trillion US dollars.
GDP: $4.49 trillion US dollars.
DEBT/GDP ratio: 321%!!! - In Japan, over 43.3% of the national debt is held domestically, including by entities like the Bank of Japan. Simultaneously, Japan is a major holder of U.S. Treasury bonds. This reflects a unique economic dynamic where Japan acts as both debtor and creditor on the global stage.

 

M1 MONEY SUPPLY - "It's only when the tide goes out that you discover who's been swimming naked." - Charlie Mangar

In 1971, the reserve currency of the world, the US dollar, split from the gold standard, resulting in a fast pace of money printing like we had never seen before. In 2008, the global financial crisis (GFC) devastated ordinary people, while those responsible were bailed out. Thankfully, Satoshi Nakamoto gifted the world Bitcoin shortly after to hedge against such stupidity. Then in 2020, Covid-19 surfaced, leaving the US government to print, print, print, brrrrrrrrrrrrrrrrr.

 

Here is a table from 2008, 2020 to 2024 on the M1 money supply in US Billions.

Global M1 Supply

 

Four of the five countries are reporting inflation most years at 3-4%, while their M1 money supply tells us a different story. Japan has the lowest inflation rate at 9.20% per annum for 16 years, with Russia, China, and Australia averaging 12% per annum in money expansion for the same period. And now, brace yourselves for the US... with a 23.7% expansion per year, of which there has been a 322% increase from 2020 to 2024. The top 1% in the US are content, while the lower class is experiencing a new era of depression.

 

National Debt GDP & M1 Money Supply
National Debt GDP & M1 Money Supply

 

Now, in terms of GOLD inventories, most of these nations are nowhere near a sovereign standard. However, Russia has quite the impressive stash, with 36% or 1/3 of their cash reserves backed by gold. It makes you wonder: why did the West start a war with Russia?

 

Bitcoin is scarce and is already being mined at a slower inflationary rate than gold per annum, and this is set to drastically reduce every 4 years. Bitcoin functions as money, is finite, borderless, and addresses the issue of decaying wealth. It's not difficult to observe what has happened since the gold standard, the GFC, and Covid. You need to work harder, longer, and sacrifice the time you spend with your family to chase your decaying dollar. Australia's dollar has inflated on average by 7.17% every year since 1975, and 11.85% every year since the GFC. If you haven't noticed how challenging it's becoming, hopefully, this helps. Share it with your friends and family.

In a world of chaos, Bitcoin brings order.

Thank you for reading.

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References:
https://www.usdebtclock.org/index.html
https://tradingeconomics.com/china/money-supply-m1
https://tradingeconomics.com/russia/money-supply-m1
https://tradingeconomics.com/japan/money-supply-m1
https://tradingeconomics.com/united-states/money-supply-m1
https://tradingeconomics.com/australia/money-supply-m1

Santoshi
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