The bottom line is that all of the stimulus and borrowing has not done much. And the question is: How bad would it have gotten if all this money hadn't been spent?
What Might Happen Next?
- Debt levels continue to rise. There's no telling at what level they become too much. $50 trillion and $100 trillion were already ridiculously high. Now global debt is more than $200 trillion. With numbers this big, is there much difference between $200 trillion and $300 trillion?
- At some point, government debt will be too much. The whole monetary system is based on trust, and at some point some governments will no longer be trusted to pay the money back.
- Real, hard assets will increase in price. Precious metals, such as gold, hold their value and are viewed as a safe havens in times of financial distress.
Investors should be cautious of the growing debt burden. Pay attention to your stop-loss levels to limit losses if markets fall. And hedge against falling markets and currencies by owning some gold. One of the easiest ways to do this is to use through the SPDR Gold Trust (GLD) , and exchange-traded fund that's designed to track the value of gold.
Kim Iskyan is the founder of Truewealth Publishing, an independent investment research company based in Singapore. Click here to sign up to receive the Truewealth Asian Investment Daily in your inbox every day, for free.